2/22 Recap. We Are Teetering On The Edge.

Another day and another fade off the highs. The market continues to be weak the last few sessions down 4% in 4 days, but now it is staring into the abyss with the uptrend that we have been in for the last 5 months looking to potentially break down. The fed minutes indicated a few fed members were fearful a recession was on the horizon, almost like the yield curve inversion is signaling something bad. On the permabull side of things one could argue a recession is good because it means we begin to cut rates and stocks love that. On the bear side of things you could say the fed is finally starting to get off the “soft landing” train. Exciting times ahead.

SPY

This broke down from the bull flag it was in and is sitting right on the trend line from October as I mentioned above. A close below that would mean the chapter we’ve been in since October is over and it’s time for a new one. Earnings season is almost over and earnings have come in lower than most even expected.

This is a zoomed in view, you can see the SPY is below so many moving averages at the moment that it is just going to be weak until those flatten out and we reclaim a few of them. Now go down to the second chart to see what concerns me, and should concern all bulls.

You can see the uptrend we’ve been in for 5 months potentially coming to an end if the SPY doesn’t bounce soon. So the next few sessions will be very critical.

Dollar

This continues to strengthen and frankly this is just a beautiful chart. This is something you buy sight unseen and it has been for a little bit now. Until we get a push down in the dollar, this will pressure equities.

Oil

Black gold continues to break to lows, this chart is horrendous, this is 7 straight red sessions, and all the indicators are atrocious. This could be a feather in the bulls cap in regards to inflation coming down if it sustains.

Today’s Unusual Options Activity & What Stood Out

I want to discuss something with this unusual flow I post daily. Trends develop over time. If you notice what I do it is simply watching trends, following flows, and trading into that trend. Take today, PANW, which I discussed in the post from 2/11 as being my best idea for the week going forward, it is up 12% today. All the flows I highlighted in that name, they didn’t pay off immediately, but over time the trend developed and the equity eventually made the move. Look at all the unusual flows I’ve posted on PANW just this month. The directional bias was to the upside and it took a bit, but it boomed.

WIX, that’s another name I’ve been pointing too for months on end because of the options flow, it is up 15% right now on very heavy volume. So just keep track of what you’re seeing in these posts everyday and follow trends. I do my best to point out the most unusual stuff but there is too much to discuss in all these datasets. With all that said let’s get into today’s unusual action.