Yo, Pit Crazies,
There will be no Fed pivot anytime soon.
Jerome Powell put that to rest.
The sound you hear is that of cold water being tossed on the market by Mr. J-Pow. The Fed will stay on the present course as laid out until there is a good reason to deviate.
So SPY did this:
Five-day SPY chart with one-minute candles
Now where do we go?
Not Back to the Lows
Look at the VIX move relative to the one-day move in SPX. Near 100 points – and more like 150 yesterday peak-to-trough in SPX – but that is still “covered” by the 30-day straddle of $230.
VIX tries to price average daily moves for one month. If SPX goes up and down 100 points a day, where do stocks end up? Nowhere, and that is what VIX said today. We will sell off and we will rally … but we will end up nowhere new.
I had several products queued up to close and then SPX fell out of bed. I am lucky I have puts because if we don’t follow through I will close them. If I was a trader, and I am, this is a great time for an Iron Condor on SPX until the election or just after. Might pair well with a short delta in Invesco QQQ Trust (Ticker: QQQ).
The Tech giants did the worst today and it looks like that will continue. The short answer is 4000 SPX is a long way away now and the cold water bath Jpow tossed on it means a choppy market for the foreseeable future. No more sugar highs for the stock market.
The Rundown
I closed what I could before the FOMC announcement and Q&A because it was such a wild card. Three wins yesterday:
Vol Edge
I ran this trade from Monday and just took the easy close on Wednesday morning:
2 Proshares Ultra VIX short term futures ETF (Ticker: UVXY) Nov25 9 puts & 1 UVXY Nov11 10.5 call closed for a 18% gain
Capitol Gains
Bill and I closed 2 trades Wednesday
Canejo Corp (Ticker: CCJ) Nov04 23/21/17 put butterfly closed for a 60% gain. (This is our favorite Uranium/Nuclear energy idea.)
Russell 2000 etf (Ticker: IWM) / Market Vectors Gold Miner ETF (Ticker: GDX) Nov11/Dec16 180/170/160 put butterfly, 25 calls closed for a 14% gain
To Your Trading Success,
AG