3/16/25 Best Idea For The Week Ahead

We wrapped up another red week in the market with the SPY closing below the 50 week for the first time since that same period in late 2023 where it last closed below the 21 week. Will this be a 1 week breakdown or will there be more pain? I don’t think anyone could answer that question especially with a major event like FOMC this week and Powell speaking after. I would say from the looks of the charts we are quite bearish right now but who knows if Powell ignites things for the bulls on Wednesday. The flip side is you could argue we don’t touch the 50 week often and things are a buy there.

On a daily chart we’ve now had 5 closes below the 200 day on the SPY, so momentum is building to the downside. You can see the 21 ema overhead just below 580 which will be stiff resistance on any move up. If we’re objective about what is forming, it appears to be a bear flag. What is a bear flag? It is simply a patten that forms when a name keeps consolidating sideways at lows and cannot seemingly make a move higher out of the range which is why the last 4 candles are below the Monday candle. Until sellers show they’re willing to step in and push stocks to higher levels, you’re just asking to get chopped up in this range. More notably you can see the 50 day now crossing down through the 100 day, not good and you’re looking at possible a “death cross”, the 50 crossing through the 200 to the downside in possibly the next month unless we pick up.

With all that said, we’re really oversold hence the bounce friday. As little swing trades it is ok if you want to dabble in here, but until we reclaim some of these moving averages, things will not be smooth sailing. I added Intel and Amazon myself on friday just as swing trades with the cash in my account, I sold really tight covered calls on them and am just looking for a tiny bounce. Amazon for instance is down 6 weeks in a row, a rare event in that name. The chart looks awful but I bought shares and sold covered calls a hair higher hoping to be called away this friday. Intel was up 15% on a nasty red day Thursday on the news of the new CEO and the call flow remains nonstop. The relative strength there really caught my eye. You will see my open book as always in tomorrow’s recap.

This weeks best idea is a retail favorite name, but it is one of the top trending names in the database as there were a ton of call flows recently. So let’s take a look at how we can take a low risk shot on this name using an unbalanced risk reversal for a credit and potentially get long this name at deep value levels.