Rocket Equities & Options Report

By Tommy O’Brien

Mar 28, 2023

The banking crises may have calmed for now, but the underlying dynamics of the banking sector will be a constant headwind for markets and the Fed going forward.

I do not see the Fed cutting like the market currently prices in this year, unless something really changes quickly in this economy crushing profits and causing unemployment to start rising dramatically. And I just don’t see this banking scare causing enough tightening to squash inflation, especially within the pockets of the economy where inflation has persisted.

Employees are steal dealing with higher living costs and are going to want higher wages to afford a similar standard of life. The collapse of SIVB and SBNY has not changed that dynamic, at least as of now.

We are looking for opportunities to short this market in the coming weeks and months.

Last week was actually a positive week in the markets, but you can see that if you pick your spots right you can actually trade this market both ways for large profits with how dramatic the moves in either direction have been.

We got a nice option move on The Fed action last week. Patience will be the name of the game. The 4,039 area in the ES looks like a nice area of resistance. We will see if we approach that level for a possible short. Markets just traded below the lows of yesterday within the last hour. If we really get going south then 3,900 is well within reach this week or sometime in the near future. All the volume is downtown in this market.

Don’t chase this market, there will be plenty of trades on both sides as we move through this year. We have a lot of volatility coming down the line. Even the Fed is insure of how much of an impact this Banking pressure will have on inflation, and the fact that the market is pricing in multiple cuts by end of year makes things especially interesting to see how things will play out.

This week we are light on economic data before things really ramp up next week with the start of Q1 earning and March data, with payrolls out next Friday April 7th, and CPI out the following Wednesday April 12th.

Stay tuned for updates!

The VIX may have calmed down for now, but I do not anticipate that the volatility is anywhere near done in this market.

Positions:

None active

Bought The SPY March 24th $400 Put at around $4.00 on Wednesday, and sold Thursday on the acceleration lower at around $7.50 - $8 for almost a 100% profit.

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