Bear time for SPY?
Recap: The SPY/VIX bounce played out as we expected on somewhat lower volume. SPY touched the downward trendline, after a false channel break. The VIX also bounced nicely after reaching the lower channel limit.
This bounce was not based on any material changes - No major Russia/Ukrain update. No additional Fed guidance. No major other news. This bounce is mostly due to the rebalancing of gamma by dealers.
New:
- CPI today (important to the FED
- Next week the Fed should hike 0.25%. The market has priced this event at a 98% probability. Volatility should be expected around their forward guidance for the additional speed of QT.
Moving Forward:
- SPY on the 4H touched the 0.50 retracement and the 20D MA.
- SPY 1H touched the downward trendline and CCI showed divergence into it which is a good sign for the bears
- VIX bounced on the lower channel on the 1H after CCI was oversold.
Targets
- Should this materialize the SPY should push previously lows of 412 before making it down to the psychological level of 400
- VIX should continue to rise and push 38
If any major news comes from Russia/Ukrain these targets will quickly be revised.
This bounce was not based on any material changes - No major Russia/Ukrain update. No additional Fed guidance. No major other news. This bounce is mostly due to the rebalancing of gamma by dealers.
New:
- CPI today (important to the FED
- Next week the Fed should hike 0.25%. The market has priced this event at a 98% probability. Volatility should be expected around their forward guidance for the additional speed of QT.
Moving Forward:
- SPY on the 4H touched the 0.50 retracement and the 20D MA.
- SPY 1H touched the downward trendline and CCI showed divergence into it which is a good sign for the bears
- VIX bounced on the lower channel on the 1H after CCI was oversold.
Targets
- Should this materialize the SPY should push previously lows of 412 before making it down to the psychological level of 400
- VIX should continue to rise and push 38
If any major news comes from Russia/Ukrain these targets will quickly be revised.
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