SPY: Room for upside and then back down
Well it looks like the result was as expected. A 50 pt basis increase which caused the market to relax and "price in" the rate hike just like last time. Now we go back up.
The timing of it is a bit sharper than last month. Previously we got a rate hike and needed to wait and entire month before the CPI told us that rates needed to rise faster than expected. This time we will get CPI on May 11th (It will be around 8%).
The fix is in on inflation. You see April of 2021 had very little inflation so the inflation rate of April won't be that different from march since prices have not really changed. In May & June we will start to see those inflation numbers head down (assuming prices don't rise from here) April will have high CPI.
I really do think it all coincides nicely with the blue line I have drawn on the channel and that yellow line which shows Horizontal resistance. We also cracked got above 50 on the 4 hour RSI which usually signals some bullish behavior if temporary. This causes me to feel we are going to stay bullish until around 440 and then once the new CPI numbers come in and everyone realizes we have another 50 pt hike coming in June the downward price movement will come again.
I personally have a 400-375-350 spread expiring on Jun 17th. I plan to add another short butterfly spread maybe 420-375-330 or something a little more conservative like 430-385-340 once we get near 435-440 (I might honestly add both depending on how the chart looks).
TLDR: Some more upside ahead as bulls push this thing, and then back down we go probably aiming towards the 375 support if we crack 400.
Just my art project.
Good luck out there.
The timing of it is a bit sharper than last month. Previously we got a rate hike and needed to wait and entire month before the CPI told us that rates needed to rise faster than expected. This time we will get CPI on May 11th (It will be around 8%).
The fix is in on inflation. You see April of 2021 had very little inflation so the inflation rate of April won't be that different from march since prices have not really changed. In May & June we will start to see those inflation numbers head down (assuming prices don't rise from here) April will have high CPI.
I really do think it all coincides nicely with the blue line I have drawn on the channel and that yellow line which shows Horizontal resistance. We also cracked got above 50 on the 4 hour RSI which usually signals some bullish behavior if temporary. This causes me to feel we are going to stay bullish until around 440 and then once the new CPI numbers come in and everyone realizes we have another 50 pt hike coming in June the downward price movement will come again.
I personally have a 400-375-350 spread expiring on Jun 17th. I plan to add another short butterfly spread maybe 420-375-330 or something a little more conservative like 430-385-340 once we get near 435-440 (I might honestly add both depending on how the chart looks).
TLDR: Some more upside ahead as bulls push this thing, and then back down we go probably aiming towards the 375 support if we crack 400.
Just my art project.
Good luck out there.
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