Today, FOMC meeting had a great rally into the close. Was difficult to play as a day trade due to volatility. So sold premium with bullish delta from last weeks crash to capture any move upward or staying in place.
Now as we rally, we need to be cautious. Below charts show where resistance is located if this rally does not continue. Remember, March in the SPX(S&P500) elected monthly bearish – this implies we may head lower by 1st quarter of 2023 to 3990 area or lower. In the meantime, we get great rallies to buy short term, but long term buys may be setup on 1st quarter of 2023.
As for May 9th, this is Russian holiday which they beat the Nazi’s in WWII. We have politicians already calling out May 9th and we may see more war tactics against Russia to push them to War.
While no one is a peace maker… you can expect War to turn up into 2023 for sure – That is World War. Do not trust NATO and there is propaganda on both sides in every war. More on this later…
Monthly Level (S&P500)
After the FOMC meeting on Wednesday, we rallied all the way up to March monthly bearish that was elected on March 29th. It did not pass it yet.. and closed below it today. This will act as resistance, next is the 4608.09(dark green line) monthly bull.
Monthly Expectations:
- May is a direction change, so we get this move up from being oversold.
- June is also a direction change, this hints we may get the move back down
- Expecting Up / Down Action in Monthly View
Weekly Level (S&P500)
Notice the 4034.30 and 3056.70 (pink lines), these were bearish reversals we did not elect last week. This acted as perfect support, but if elected we could hit 3653 area.
This week 5/2 was also a Turning Point, this gives us a chance of change of direction, which we likely seen today. This trend stays in motion till about May 16th, with a target of 4416.80 as resistance.
Weekly Expectations:
- May 16th is the next Turning Point – Waiting to see
- Could trend up till the 16th if we close higher then this weeks high
- We stopped at March Bear Reversal(dark red line) today – Caution
Daily Level (S&P500)
After todays FOMC rally, we tested the monthly March bear that was elected. We now have a direction change tomorrow. This could move us down for the day. Then a panic on the 6th. Usually if we head higher into Panic, then we go lower on panic. If we head lower into Panic, we go back up.
Day Expectation:
- Some downward pressure tomorrow
- Waiting to see Panic on 6th – Could be turn point
- May 9th – Russia independence day against the Nazi’s in WW2
- Expecting War Mongering
Looking At The VIX (Opposite of S&P500)
The vix measures the fear… if it goes up traders are buying more puts (to cover any losses). So premium in options when buying them gets expensive. This is a good time to sell option premium. It is like selling insurance right before a hurricane, people will pay more for the insurance – so you sell it to them. As long as your strikes/hurricane does not get hit, you can keep the money.
If VIX goes up, we are crashing in markets. If VIX goes down, we are usually going up or avoiding any crash in the mean time.
Weekly View of Vix
- Last Apr 25 was highest close (Turning Point) = Red Vertical Bar
- This Week, overshot tested 36.50 year bull and failed (Outside reversal down)
- We may have one more week lower into next week
- Watching for low next week or May 23rd (This would be high in Markets)
Daily View of VIX
- Turning Point & Possible Panic (low to high) tomorrow
- This also explains the direction change tomorrow in S&P500
- Expecting another week lower and S&P up for another week
- Caution on May 9th — Russia Holiday
In Summary:
- Volatility was at huge levels this week
- Selling option premium was safest bet – worked well
- We are bullish into the year 2032 for equity markets, but don’t like buying long term after March Bear Elected
- Waiting to load larger position early Quarter 1 of 2023
- We can get rally till May 16th in S&P500… but caution May 9th (Russian Holiday)
- Expecting upward moves into June S&P500 and NasDaq, but not loading up long term.
- Caution on anything China – Sanction will likely be passed on them into the future causing chaos