Hey There Income Hunter,

For all the commotion and market fear displayed through the media, S&P 500 Index (Ticker: SPX) opened this week at 3,985 and closed the week at 3,971.

So, what is all the fuss about?

Well, we as #IncomeHunters understand that the Fed and central banks in the West are playing an incredible game of Whack-A-Mole …

By that I mean, every time a mini crisis surfaces, a central bank quickly pummels it back into its hole by providing the funding the market needs to remain somewhat stable.

Until the next one pops up and the process repeats itself.

Now, can the central banks outlast the moles?

My answer is no, certainly not longer-term

But what about in the weeks ahead?

Today, I answer that question and present my profit strategy for the week.

SPX: A Market Going Nowhere Fast 

Since the beginning of March SPX has gone nowhere. As you can see in the chart below, the market opened the month testing 3800 and rallied to the 4000 area …  

Notice that when the market approached 4000 SPX reversed. This is because 4000 has been the largest open interest strike for most of the past year. 

At this level Investors closed many of their 4000 calls and as option dealers purchase the calls they must sell stock to delta-hedge their option book, which pushed the market back down. 

The market slowed down as 4000 provided a magnet for option hedgers until the Fed meeting on Wednesday provided the catalyst that unhinged the pinning impact of the 4000 strike.

Here is where it got very interesting …

When SPX broke down on news of the regional banking crisis there was no follow through, which fueled a short covering rally on Friday and the market ended closing close to where it opened for the week. 

Why Isn’t The Market Crashing? 

IMO, the Fed will continue to provide liquidity to the bond market, which is a positive flow for stocks. 

Plus, China (chart below) is injecting a large amount of liquidity into the markets that is boosting risk assets globally. 

What’s the Trade? 

For this week watch how SPX trades below 4000 on a break above 4000 we should see a push to 4065, which is a huge call strike due to a JPM hedge for its institutional stock fund. 

Below 3950 we should see a push lower to 3900, which is key support. Only if we break 3900 would I stay with bearish positions .

One trade I have is a SPY 390/380/370 put butterfly. It is a hedge against long positions I own in silver and silver miners …

My longer-term theme that I am positioning for is bullish strategies in Silver and silver miners, energy and commodities against bearish strategies in financial assets, meaning interest rate sensitive stocks and also US bonds.

Money printing is back! Ultimately that means inflation will come back and that is great for real assets and bad for financial assets … 

More on that in the days and weeks ahead … In the meantime …

Live and Trade With Passion My Friend,

Griff