Rocket Equities & Options Report

By Tommy O’Brien

Mar 7, 2023

Powell’s speech is out, and markets are reacting to higher than expected rates coming down the line. The ES is on its way to 3,825, which would complete an AB = CD, as well as bring it back to the lows as we came into the new year, and right at the .618 of the prior move higher in the markets.

On a daily chart you can see that this 3,825 area is also the .618 from the acceleration higher in the market since the October lows, and also lines up with the area of support from the end of December and start of January.

The 10 Year Note is at a critical area, it has got back within its downtrend channel, and could be bouncing off its upper boundary line indicating lower price and higher rates coming at us.

The Dollar Index also looks like it could be bouncing off its .618 area and trending higher, which would line up with higher rates.

The VIX looks like it could be catching a bid, and if so it has room to run to the upside.

All of this lines up with risk vs. reward schewed to the downside. Powell just started talking but I don’t see the market catching a bid. Look out below. We get Powell talking to the Senate today and the House tomorrow. We get Non-farm payrolls this Friday morning. We get CPI March 14th. And then we get a Fed meeting 2 weeks from tomorrow, March 22nd. This could line up a very volatile couple of weeks for markets. Stay tuned for updates!

Positions:

We are holding a debit put spread in the SPY from $370-$330 for a net debit (cost) of about $4.60. This is currently trading at around $0.17 and looks to expire worthless, we will hold it for the rare chance the market really rips lower, but the move is probably out of the realm of possible at this time even with a rapid move down, although I wouldn’t count anything out in this market right now with the amount of data we get just in the next week with jobs and CPI data, among others.

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