DailyPlay Updates – May 25, 2022

When I spend two hours looking at many dozens of charts, and I can’t find a single trade idea that I’m comfortable putting on, it says a lot about the market location right now. Too many charts are approaching support against old lows from sometime over the past few years, while also seemingly incapable of holding a rally that lasts more than a day. It makes it very tough to put on a new high-confidence level trade. And thus, there are times – and this is one of them – that I simply don’t want to add a new long or short position with prices where they currently are located. 

However, I’ve been pretty vocal that I am not a US Dollar fan (making me one of the very few). Looking at the PowerShares DB US Dollar Bullish ETF (UUP), we see that the recent high from two weeks ago was precisely against the highest weekly close in March 2020 (and actually, since this ETF started back in 2008).

So, if we see this rally back up to the $27.40 to $27.70 level, we’ll then look to put on some type of bearish play. I’m not even going to show you the possible strikes just yet as the deltas drop dramatically at even the smallest strike differential. (At current quoted prices, selling a late-June $27.50/$28.50 call spread would only take in a very small percent of the strike differential.) Therefore, we will watch and monitor this and alert you via email should we get the chance to put this on sometime in the next week or two at our preferred entry zone.

UUP – Weekly

Lastly, we continue to see very significant intra-day swings. That’s professional money managers – along with individual investors – being made mince-meat by computers that are trying to play in what’s becoming an even more illiquid environment. If the big guys and gals aren’t getting it right, then it’s even harder for individuals to align with what they’re doing because the pros are as confounded as anyone else.

The bottom line: Keep your powder dry for when better opportunities present themselves.