Shorter week, NFP, FED & melt up continues
Can see more bull in this interesting market BUT VOLATILITY IS COMING
We’ve just finished off a shorter week in the market, which is volatile overall, but optimism and bullishness are hidden in all of this. Weak start on the bears and they stood no chance as NFP came in on the holiday and propped things back higher giving the doves more of a chance of pausing rate hikes.
ES 0.00%↑ futures up on the week, 0.25%, $NQ futures up 0.75% on the week.
CL 0.00%↑ shocked the world with an output cut from major OPEC+. Futures ran above $81 temporarily into the top of a resistance block of distribution. The reduction is going to be led by OPEC Kingpin Saudi Arabia. Total production cuts about 1.2M bbl/day from May until the end of 2023. Russia recently cut production by 500K bbl/day. This means about 3% of the world’s oil has been removed from the market in the past year.
Friday’s non-farm payrolls out of the US came out of Good Friday, rising 236K in March, just under the 240K expected and less than 326K added in February. This popped the expectations for a 25bps hike in May up to 71%. The monthly average is about 344k over the last 6 months.
The 10-year Treasury yield rose 12 basis points to 3.41% on Friday.
Where does that put us in the overall market? Are we looking for continued upside like the response from the futures on the NFP report or are we nearing a top? Overall the sellers were weak-handed on the short week’s auction and the possibility of a continued melt-up seems highly probable before we see the next real pullback. We’re coming into a euphoric episode in the market where all traders think the worst is over and it’s time to get super long, this is when things do get volatile. Overall I think the melt-up and the 4170 level gets blown apart if it gets traded again before the volatile spike comes out.
We’ve settled at the ledge of a key distribution around 4142. Overall the sellers do have a chance but seem weak. Thinking we do accept higher and move into the 4170 run up into 4205 this week before sellers try to come in again but I think the melt-up has begun.
I would like dips to be bought into 4125, not really looking for anything below that because the bears can actually try to hold out, inadequately though.
There are a few other things to look at naturally, our positions that I had posted, some of the other tech correlations, and more.
Past trade ideas:
Longs 400/410C $SPY for May at 380. which came on Monday, now SPY trading around 410.
$SPXL leveraged shares to add March 13 around $60 hit a high of 74.50
Long-term adds for (March 13)
GOOGL 2.22%↑ $90 to $108 (20%+)
VOO 0.27%↑ $350 to $376 (7%+)
IEF -0.05%↓ $99 to $100 (1%+) I like this lower.
BRO 0.69%↑ $53.50 to $59 (10%+)
UNH 0.45%↑ 459 to 512 (11.5%+)
Last week talked about
DIS 0.00%↑ (rotating)
CRWD 0.00%↑ I do like lower into 104
TLT 0.00%↑ think there is a chance for the bonds to make a nice pop with possible rate drops.
This week let’s talk everlasting tech, IWM 0.00%↑ and more.
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