Yo, Pit Crazies,

In the old days, before the Federal Reserve became the great enabler, good news was good news.

For example, jobs were a good thing that promoted economic growth.

As of Friday, employers were still hiring. My thesis post-Covid trade has been since the government tossed everyone out of work, businesses are now getting back to work.

That’s a no-brainer in my view as many large-population states kept lockdowns going on for a very long time.

Other states not so much.

My state, Maine, is somewhere in the middle, and currently there are signs out for job openings everywhere. The job market was pretty tight pre-Covid, too. It seems Uncle Sam is spending a lot of time just undoing things he messed up in the first place.

Meanwhile, Vol Man is looking at another moonshot rally in SPX …

Five-day SPX chart with one-minute candles

Will it hold?

VIX Fell Apart Prior to CPI

I know there is a weekend, but the drop in volatility was significant.

Index skew has been flat all week and ATM IV has been relatively high.

And guess what we got – a 100 point SPX move in one day Friday. The SPX Jan. 13 3,900 strike is pricing $100 for the straddle for next week, too.

The move traders were looking for happened a little early.

Also look at commodity prices. Investors were marking down commodity stocks bigtime before last week and they got a big bounce on Friday. Generally a bid for commodities is not recessionary,

Stocks are not making lower lows and traders are accepting higher rates for 2023.

Sounds crazy, but we could start off 2023 with 4000 SPX early.

To Your Trading Success,

AG