Inflation and Sharp Downturn

inflation options trading

Inflation and Sharp Downturn

 

MARKET OVERVIEW
Friday has arrived! This week, as many have been in recent months, has been a wild ride. This blog uses the SPY ETF as a common level since it is so heavily traded by day traders and short term speculators. The fireworks all happened the last two days of this week. Monday through Wednesday featured a relatively typical chop, and then Thursday featured a heavy afternoon sell off with a large dose of downward bias into close. Friday morning featured CPI numbers showing that inflation had risen, and a pre-market gap down in SPY resulted in a sideways late afternoon session of unrelenting chop at the strong $390 level. The questions were will 390 hold for a bounce rally into afternoon and close or will it give way after being tested repeatedly and lead to bearish continuation? As time would eventually tell, the $390 level held, price action slid sideways, and the week ended red… coiled tight around a key level of $390.

 

INSIDE THE BOX
One of the newest and most exciting things added to our platform this week is the Dollar Flow study. There was much discussion of this new feature this week, and this blog will feature a full feature on it in the next few days. It is a powerful new feature, so stay tuned.

Our trading rooms feature moderators and members on voice discussing current and possible options, futures, and common shares trades. Generally, the primary futures discussion centers on /es and /mes, and quite a few of our moderators and members have been exploring this powerful form of trading as of late. It’s always good to add various kinds of trading to your practice, and futures are a great addition for many traders.

This week the moderators were heavy on voice discussing trades they were watching. One notable trade was the fact that SPY was bouncing on its 15-minute Opening Range Breakout low multiple times throughout the day. This is a very powerful and useful study our members have access to, and it is a highly watched key level in the day trading world. So, our moderators were talking about it, and members were discussing it in our trading rooms. When the big drop happened on Thursday, quite a few traders went in short with SPY puts and the price action fell strongly. Having access to a team with many people watching particular setups is a powerful way to undertake retail trading.

And since we’re on the subject of great plays this week, we alerted our members of a CCJ $25.5 call on Tuesday afternoon. News came out not long afterward, and stock ran! This ended up being a 226% gain. And, mind you, this was on during a week that was, up to that point, chopping to and fro in a range. Flow trading is a powerful approach to trading, and we are pleased this is one of the recent big gainers.

 

TAKEAWAY
Some of the notable plays made in our trading rooms this week include SPY, QQQ, /es, /mes, SPX, GME, TSLA, XOM, CCJ, and more. Friday showed, again, how data releases can really affect the market. The power of a large and vibrant trading community with many rooms for different trading strategies, styles, approaches, and instruments was also displayed with the moderators calling out trades, discussing charts, managing trades, and posting exits was also on full display. As we look forward to next week in the market, the song remains the same: wait, observe, seek data-informed trades, and be patient. Happy Friday, and we will see you soon.