SPY Weekly review and Forecast: August 15th, 2022
The Summer rally continued this week on the back of strong earnings by Disney (
DIS) and the market interpreting CPI data as inflation cooling. However, I think the market internals are telling a more important story. This week, the market paced by the financials... on Thursday, the XLF tested the upper edge of its weekly expected move and ultimately broke outside of it on Friday, leading to a textbook end of week Gamma squeeze. Below is a snapshot of this past week's action (percentage gains/losses, expected moves for the upcoming week) and some ideas about what we may see in the coming week.
Next week has some potentially market moving events like PMI (Tuesday), and GDP (Thursday), as well as a few other data drops scattered throughout the week. The SPY closed within a point of the intermediate level of 428 I added last week. The rally has been fierce, so I have to wonder how much higher it might go before we see some kind of a pull back. Rather than try and guess what the action is going to be like, I think the XLF is holding the cards. Its at a key area on possible resistance on it's Daily Volume Profile... a meaningful break above will likely drag the rest of the market up to 440. If it rejects, it will likely lead to a pull back in the broader market. Also worth noting, SKEW continues to rise, signaling that a bout of volatility could be looming.
DIS) and the market interpreting CPI data as inflation cooling. However, I think the market internals are telling a more important story. This week, the market paced by the financials... on Thursday, the XLF tested the upper edge of its weekly expected move and ultimately broke outside of it on Friday, leading to a textbook end of week Gamma squeeze. Below is a snapshot of this past week's action (percentage gains/losses, expected moves for the upcoming week) and some ideas about what we may see in the coming week. - SPY +1.69% (+/-7.65)
- QQQ +1.95% (+/- 9.33)
- IWM +2.04% (+/- 5.06)
____________________ - Technology +1.99%
- Energy +0.76%
- Financials +1.57%
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VIX: -3.32% (19.52; ~30% IV Percentile)
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Next week has some potentially market moving events like PMI (Tuesday), and GDP (Thursday), as well as a few other data drops scattered throughout the week. The SPY closed within a point of the intermediate level of 428 I added last week. The rally has been fierce, so I have to wonder how much higher it might go before we see some kind of a pull back. Rather than try and guess what the action is going to be like, I think the XLF is holding the cards. Its at a key area on possible resistance on it's Daily Volume Profile... a meaningful break above will likely drag the rest of the market up to 440. If it rejects, it will likely lead to a pull back in the broader market. Also worth noting, SKEW continues to rise, signaling that a bout of volatility could be looming.
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