Weekly Raid #62 - Does the News not know how to News anymore
Happy Wednesday Traders
We have plenty to discuss today so lets jump in.
News of the day
We have a crap load of news due out today of varying importance.
First we have a 30 year mortgage rate. I think this is worth keeping an eye on not for its market moving ability, but because at this point housing has hit the point of the insane. Prices just keep marching up in lockstep with rates. Anyone who has been in investing for more than just covid knows why that is so crazy. The 30 year rate will eventually hit a breaking point though. That is what I am watching for, and I think it is around 8.75%.
PPI is also out this morning, and this is a vital number to watch for producer price expansion. These are almost always passed directly to the consumer, so any continued increase here will most likely directly affect prices. With last months surprise beat, a lot of eyes will be on this release.
Finally we have the FOMC minutes release this afternoon. We already know what the rate increase was, but these minutes releases also typically produce some volatility as everyone’s algo attempts to read and parse together an edge for future rates. I am not sure this is actually helpful in the long run, but everyone seems to do it, so just be careful of the volatility.
I am looking at news releases here as well today. Mostly that they appear to been having a smaller and smaller actual impact on the market. When I started to trade Forex a decade ago, I used to put brackets on an NFP release and just watch the fun happen. Now that barely moves the markets. The same can be said for CPI, PPI, housing data, and more. The only thing that really seems to matter is either Rate news or AI news.
I think this is a direct effect of all of the money printing. While the Fed may have never directly propped up the markets, if that is the only place you can get more than ½ a point on your money, where are you going to put it? Thats why all these twitter Gurus are running around screaming about how you have to invest in the SPY or VOO to make anything for retirement. That is all they know.
Because of this, I think news will continue to have a minimal impact on the markets until some of these money gets scared out of it. We will still get volatility and impulse moves on the initial release, but it appears the days of news setting the trend for the day are gone for now (unless the trend is up because “markets only go up bro”).
In order to see any meaningful downside move, its my guess (and strictly a guess) that we will need to see big tech names start to drop in a meaningful way. For the time being everyone assumes AAPL, TSLA, NVDA and the rest of the tech giants will save the market.
What are we watching today? Well excellent question lets take a jump in.
BA is first up this morning. It is charging back towards its yearly VAL. I will be watching that area for a potential trade. I will watch the Tape around the 178-180 handle. Once I see how its trading I will look to either trade it back to POC or take it back short.
GEO is also on my watchlist for the day. I am already in some common shares of this but I think the chart looks constructive and if we can bust through the 9-9.10 handle I think we could see a serious move. I will attempt to post some short interest data on my twitter timeline later. It is still a starter position for me so I will look to continue to accumulate. When I hold common shares, my timeline is usually months to years just as a clarification.
Last up is PYPL. It is sitting right around its VAL for the year. I would be watching the tape and any break above 59ish and I would look for a run back to the mid 60’s some place. Great candidate for a put spread to collect the premium.
As always trade well and Good Luck
As always this is all for educational purposes only. You are solely responsible for your trades as I am for mine. Nothing in here should be construed as financial advice, but only educational content about the markets and my particular trading style.