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Trading Passively vs Aggressively in the Stock Market
December 22, 2021
Weekly Wisdom: Does VIX Rip Higher?
October 13, 2022

Weekly Wisdom: Levels to Know and Moves to Look For

Published by T3 Trading Group on October 6, 2022

Greetings fellow traders and welcome to the first edition of Weekly Wisdom: Levels to Know and Moves to Look For!

This newsletter is meant to tell you what we’re currently seeing in these crazy markets and what we have our focus on going forward.

So let’s get started!

 

Taking a look back on this week, October 3-7:

  • SPX briefly makes a new low on the year for a new low of 3,584 before quickly reclaiming the year low 3,636 to begin a rally.
  • Last week we pointed out positive divergence building in the VIX with no new highs on the year for VIX despite lower lows on the SPX – this was a possible warning sign for bears that new SPX lows would not see much follow through, and could reverse if the VIX fails to push to new highs.
  • TNX – the 10-year yield has remained under year highs of 4% made before the Bank of England made their move last Wednesday morning, but also remains over the previous year highs of 3.5% – be very careful if TNX is able to make a new high on the year.
  • DXY – the US Dollar Index also topped out the same day as TNX, just shy of 115 and has also remained below those recent highs – caution would certainly be needed if DXY were to make a new high on the year.
  • Although VIX has briefly topped out, it still remains elevated with SPX giving 2-3%+ moves nearly every day. SPX should be able to “melt” higher if the VIX can begin a real downtrend – levels to watch below for bounces are 27, 25, and 23.
  • On Friday 10/7 we get numbers for Non-Farm Employment Change, Unemployment Rate, and Average Hourly Earnings m/m. Although it sounds counterintuitive, the Fed will want to see slower numbers in hiring.

 

And here’s what we are eyeing next week, October 10-14:

  • SPX has resistance higher at 3,800, 3,850, 3,900, 3,960, with a gap over 4,037 to 4,100.
  • Going forward, bulls need to hold 3,700 on SPX with 3,650 being a line in the sand.
  • Bears do not want to see SPX over 3,900 or they risk losing control on the bigger, weekly picture.
  • Also keep on eye on VVIX, the CBOE VIX Volatility Index (i.e. the volatility of volatility) – back over the 95 level could be an early warning sign from VVIX, which failed to give another leg higher over June highs similar to VIX.
  • Economic data points remain important to watch going forward as we are in a “good news is bad news” environment, as the Fed wants to see the economy cool off with their fight to tame inflation.
  • As an example – On Wednesday 10/5, we had an ISM Services PMI number of 56.7 beating forecasts of 56 which gave the market a down move intraday
  • Wednesday, October 12 we get September PPI m/m and core PPI m/m at 8:30am EST.
  • Thursday, October 13 we get the ever-so hyped September CPI inflation numbers at 8:30am EST – will we finally see some cooling here?
  • Friday, October 14 we’ll get numbers for September Retail Sales at 8:30am EST.
  • Bulls are going to be desperately looking for a cooler CPI number next week for an all clear move toward 3,900 SPX in hopes the Fed can begin backing off and dropping their full hawkish tone.

 

Here’s your Chart of the Week (via RBC):

Bottoming takes time, especially in times of rising tightness in financial conditions.

Source: https://twitter.com/WallStJesus/status/1577081035287801857/photo/1

 

SPY Daily / Weekly Update:

 

 

Disclosures

Patrick Hawe’s current positions: Long PINS

 

Patrick Hawe is an Associated Member of T3 Trading Group, LLC (“T3TG”), a SEC Registered Broker-Dealer & Member of FINRA/SIPC. All trades made are placed through T3TG.

T3 Live, LLC is a financial publisher that disseminates information about economic, business, and capital markets issues through various media. T3 Live is not a Broker-Dealer, an Investment Adviser, or any other type of business subject to regulation by the SEC, CFTC, state securities regulators or any “self-regulatory organization” (such as FINRA). Although T3 Live and T3TG are affiliated companies by virtue of common ownership, the companies are managed separately and engage in different businesses.

The programs that T3TG distributes (including articles, commentary, videos, blogs and social media postings) are for informational and educational purposes only. No one should consider the information disseminated by T3TG to be personalized investment advice, a recommendation to buy, sell or hold any investment, an offer (or a solicitation of an offer) to buy or sell any investment, or the provision of any other kind of investment advice. No one associated with T3TG is authorized to make any representation to the contrary.

T3TG provides information that viewers of its programs may consider in making their own investment decisions. However, any viewer will be responsible for considering such information carefully and evaluating how it might relate to that viewer’s own decision to buy, sell or hold any investment. Such decisions must be based on that viewer’s individual and independent evaluation of his or her financial circumstances, investment objectives, risk tolerance, liquidity needs, family commitments and other factors, not in reliance on any information obtained from T3TG.

Statements by any person (whether identified as associated with T3 Live, T3 Trading Group, or any other entity) represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.

It is possible that any individual providing information or expressing an opinion on any T3TG program may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Viewers of T3TG programs should take this into account when evaluating the information provided or the opinion being expressed.

Although T3TG strives to provide accurate and reliable information from sources that it believes to be reliable, T3TG makes no guarantees as to the accuracy, completeness, timeliness, or correctness of any such information. T3TG makes no guarantee or promise of any kind, express or implied, that anyone will profit from or avoid losses from using information disseminated through T3TG.

All investments are subject to risk of loss, which you should consider in making any investment decisions. Viewers of T3TG programs should consult with their financial advisors, attorneys, accountants or other qualified professionals prior to making any investment decision.

The risk of loss in trading options can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in options trading may benefit you as well as conversely lead to large losses beyond your initial investment. Past results are not indicative of future results. No representation is being made that any account will or is likely to achieve profits similar to those shown.

T3 Trading Group, LLC is a Registered SEC Broker-Dealer and Member of FINRA/SIPC. All trading conducted by contributors associated with T3TG on the Virtual Trading Floor is done through T3TG. For more information on T3 Trading Group, LLC please visit www.T3Trading.com.

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About Us

T3 Trading Group, LLC, strives to be a complete destination for traders looking to maximize their performance in today’s financial markets. Since our inception in 2007, T3 Trading Group has developed and supported thousands of professional licensed traders throughout the United States.

DISCLOSURES

T3 Trading Group, LLC is a Registered SEC Broker-Dealer & Member of FINRA / SIPC.

T3 Live, LLC, T3 Securities, Inc and T3 Trading Group, LLC are separate, but affiliated companies through common ownership.

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