DailyPlay Update – August 31, 2022

Investment Rationale

Stocks got hit yesterday, seeing all overnight gains in futures disappear, as housing data came in weaker than expected, and the Consumer Confidence and JOLT jobs number came in better than expected – the latter two looked at bearishly by investors as it helps show the Fed that they can continue to slow the economy by raising rates further. After the second session of seeing early futures markets rally fade, I sold out of my S&P futures long at the same price (4024) I got in at on Monday.  And I’m glad I did, because it saved me today’s downdraft.

Today is the last trading day of August, and Friday – for all practical purposes – the last trading day of the summer. We can still see some increased volatility from both of those “endings”, and with this week the heavily vacationed one it is, don’t be surprised to see some big intraday swings, too. 

Today the SPX and SPY will more than likely post daily Setup -9 count s– always a possible trading bounce point. (The NDX and QQQ marked the -9 count yesterday.) Both of these two major US indexes are also near their respective weekly support levels I laid out on Monday (so maybe by Friday’s close those weekly support levels hold for a trading bounce?) However, I still think the big picture is a negative one, and that rallies should be sold into to lighten overall equity market exposure. (It would take a substantial change in known fundamentals to alter my view.)

In the meantime, we still have to deal with this Friday’s expiration in our long VALE $13.5/$14.5 call spread. Yesterday, we sold out of 15 of the 45 we still had on, and today we will sell out of the remaining 30. (Until yesterday, price hadn’t materially moved against us, but Tuesday’s 4.7% loss makes it very unlikely for price to get back above $13.50 by Friday’s close. It’s up to you, as always, should you wish to hold off and hope for Friday to get that upmove for you to then exercise the call to buy the stock.)

VALE – Daily

A reminder that we have educational webinars today at 4:15pm ET with Jess, Tony, and me, and then Friday morning a Members Only open Q&A session with me at 8:45am ET.