8 Jan 2023 SPX Weekly - First CPI of 2023
Accuracy: 44/49 (89.58%)
SPX below 4000 - Correct
Also to touch on the debit butterfly trade idea I was thinking about last week, SPX actually closed right in one of the butterfly with almost near max profit.
I didn't enter the trade though, was just an idea and I kinda think I got lucky on this one. Debit butterfly are usually pretty hard to pin on profit. Will think about other ways to see if this weekly SPX could develop into some form of shorter term strategy that I always wanted for awhile now. Maybe something along 4-21 DTE.
Last Week
The symmetrical triangle got invalidated a expected but SPX still remains consolidating within the 3800-3900 range with Friday strong rally and close around 3900.
On the daily candle chart, we're still on a downtrend, last weeks movement pretty much still looks like a lower high formation in a lower low, lower high downtrend momentum.
Next Week
Same 3 scenarios that I have been doing recently for next week's analysis. Getting used to this as it's simpler and consistent. All I do is to simplify and identify 3 potential scenario being bullish, neutral or bearish. Then find the respective areas of support and resistance.
So as shown on the chart:
- Green - 4000
- Yellow - 3800 - 3900
- Red - 3700
We're actually in these areas for the 4th week now and the main difference to me is more of the accumulation of a break out is growing more and more each week. Waiting for a strong trigger which seems to be potentially coming next week.
Economic Calendar
Next week definitely seems like an exciting week with Powell speaking on Tuesday before CPI released on Thursday. CPI releasing together with Jobless Claims. Then FOMC member speaking on Friday before Consumer Expectation/Sentiments.
This chain of events seems like we're gonna see some big moves which coincides with the consolidation of breakout in the charts. Just not sure which direction we'll be looking at.
Prediction
This week's prediction comes with a little hope and bias. And a little aggressiveness expectation. I'm taking the short term reversal to the upside from the early indication of very slight higher high forming. I would wanna see it breaking above 3900 and close within 3900-4000 for next week.
SPX above 3800
Trade Idea
Again disclaimer is I'm not trading this, I'm just throwing ideas and seeing how it developed. Much like a paper trading approach and written down for reference.
Instead of putting a debit butterfly, I'm thinking if I could put a shorter version of the long term 1-1-2 trade on 7 DTE. Which looks like the Long Iron Condor above.
Upfront I collected a $200~ credit:
- if SPX goes down, I'll keep the credit
- if SPX goes up but remains within 4032, I got a potential max profit of $700~
- if SPX goes up too fast beyond 4030, I'll probably have to watch for closing it for a early stoploss.
Generally, this looks nice but the 3rd point is hard to execute and decide. Anyway, let's just see how it develop. Not gonna trade it anyway.