WE JUST STARTED…
Do you realise that we just started the year and we are only at the second month of the year? But anyone of you feel that it seems like you did not get anywhere or do anything for the past 2 months?
Well the fact is time passes us so fast that we are never able to reverse it once it passes. If you felt that you had not achieved much, probably it is because you did not even plan what you wanted to achieve in the first place. Am I right or wrong?
It is always great to set a long term goal. But this goal have to be broken down to bite sizes of what little steps you need to achieve before you reach the big goal. You can break it down to months or quarters depending on what kind of goal and the time horizon you set. Measure the achievements for each milestone set and reflect if you are closer or further to your goals with the activities or milestone achievements. If you are on track, great! If you are not, check what did you do wrong or how you could improve them to be able to catchup and achieve them before the next milestone.
Don’t worry, you still have 10 months to catch up…
“A goal without a plan is just a wish…”
SPX (3970)
SPX had a bad week dropping further by 109 points (2.67%) breaking all possible support lines at 4015 and psychological support at 4000. As is now, it fell down below 4000 points closing at 3970.
Nevertheless, we also saw last week that each day the price gapped down on opening went lower but during the day, it recovered back some lost grounds. Lastly on Friday, it bounced off the support line of 3949. Overall, the market sentiment is more skewed towards the bear as the recent economic data shows that inflation is not going down as fast as the Fed thinks or want. At the last rate hike, the Fed was positive that they were moving towards their goals of bringdown inflation to 2% but the economic data on inflation that came out after was not in line. As a result, the expectation that the rate hikes may stop after the May meeting, might be far fetch now. Nevertheless, we still have the 22 March meeting and one more chance at the Feb CPI release in March just before the Fed Rate Hike meeting to see if we could have other outcome.
SPX may continue to go down further a bit until it finds more firm support probably at the previous 1 year resistance trendline in green. The level 3885 is the next down support level to watch out for. With that as the last low price before the last rally up in January, and the green support line above, we may see very strong support here in the next weeks.
The other thing to watch for is the DXY (Dollar Currency Index) which is on the rise due to the strengthening of USD which was fueled by the expectation of higher interest rate to continue, albeit the sticky inflation data which will push the Fed to continue the tightening process and lowered the expectation of any rate cuts to happen within 2023. DXY broke above 104 this week after a tight consolidation for the past 2+ weeks. Remember that DXY has a negative correlation with SPX. When DXY goes up, SPX will come down.
There is a resistance level at 105.6 just sightly above the current level of 105.26. If DXY bounces down, when it hits this resistance, SPX will likely halt the retracement and turn bullish again. So I will watch this level closely to identify SPX next move. It will be a quite strong push up for SPX if DXY hits 105.6 and bounces back down. As seen in the last week's price action, the momentum of the bulls are quite strong supporting a recovery on each dip.
The trading range for the week is between 3850 and 4050.
NDX (11969)
NDX went down 388 points (3.14%) for the week. It has been bearish for the last 3 weeks as the economic data which came out after the last Fed Rate hike makes further or prolonged rate hike imminent at least for now until fresh data shows inflation is coming down. We still have some chance for the February inflation data comes out in March, about a week before the next interest hike meeting.
Last Friday, NDX bounced off daily 200 Moving Average. However, on the weekly chart, it seems there are still room for further downside move to the weekly 200 MA around 11700 level. Similarly, we will keep an eye on DXY for the next move on NDX.
12,000 level would form a strong psychological support level. If it breaks below, it may range between 11500 to 12000 the same ranging levels back in mid November to mid December.
The trading range for the week is between 11650 and 12150.
TRADING OPTIONS ON HANG SENG INDEX (HSI) AND HANG SENG TECH INDEX (HSTECH)
HSI broken down below 20,000 level. Although for a brief moment this morning it went back up above the level but could not sustain for long. As is, it seems that it will not hold this level and may continue to go down further in the next days. The daily 200 moving average could act as a support at around 19600 and the next support down is 19300.
The current level, is at 50% Fibonacci retracement from the last rally in November. 19600 will be the 38.2% Fibonacci retracement from the end Oct lows. It should hold a while at these levels.
Our February expiry positions had turned bad in the last weeks to expiry. Rolling is not as easy and practically impossible. So trade management is not possible and we need to take a hit on these. The story is still the same, take profits when you can and if you leave it too long, the risk crepes in most of the time, there may be exceptions but most likely than ever, you lose…
TRADE DIGEST - XOM WINNER 50% TARGET
Last week, we posted notifications for take profit as the 50% profit target was reached. If you still held on to your position, the profits is now is 58%. If you want, keep for a while longer but remember your risk…
We are now more or less in the middle of the trade price range of 103 - 119. We took the trade on 8 February.
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DISCLOSURES
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
MYstyework is an Online Financial Literacy Educator and materials provided is solely by MYstylework and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. MYstylework, through its contents, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. MYstylework is not in the business of transacting securities trades or an investment adviser.