Hey There Income Hunter,

 

As I was traveling last week, I was shocked at how busy the airports were.

 

But beware. It may have been the last push before the shutdown of spending into the winter judging by these recent headlines …

 

• A “tsunami of shutoffs”: 1-in-6 US homes are behind in their utility bills, facing shutoffs
• Layoffs are planned at half of all companies, PwC survey shows.

 

If the headlines above are correct about consumers stretching, that means that if the Fed is successful in weakening the job market then consumer spending will drop precipitously.

 

There is an efficient way to set up for this trade, and today we’ll take a look.

 

SPDR Consumer Discretionary ETF (XLY)

 

XLY is a high-energy $5 billion ETF that is top-heavy with Amazon and Tesla.

 

I think the timing is good for playing this next leg of the down trade with a bit more exposure to the big tech/consumer discretionary names, and XLY provides that.

 

Notice the failure as XLY approached the 50 dma. I think we will see rotation back down to test the 200 dma heading into the Sept. 16 option expiration and the Fed’s Sept. 21 meeting. 

 

Also notice yesterday’s extremely low volume. The market was unable to attract any buyers a day after the Powell speech meltdown …

 

 

With Powell mentioning the potential for another big hike at the Sept. 21 meeting (possibly .75%), sellers will regain control. We may not see new lows, but I do think we will test the 200 dma on XLY. 

 

I like playing a XLY SEP16 155/150 put spread … Traders may be able to enter the trade at around $1.75, which is nearly a 3-to-1 risk reward. 

 

Not bad for a high probability trade after Powell’s speech this past Friday.

 

Bring It Home

 

The last week of summer may be light on volume, but it does present opportunities to set up for what should be an active and volatile September. 

 

Everyone thinks of October as the worst month for the stock market …

 

But since 2000, on average, the month of September has been the worst month for the S&P 500 ETF (SPY).

 

I do not see why this year would be any different.

 

On top of that, the consumer discretionary sector is historically the worst performing sector in an economic downturn …

 

So, get set up, get out in front and let the market come to you – with Power Income Trader.

 

Questions? Drop a note below or email me.

 

Live and Trade With Passion My Friend,

 

Griff