Yo Pit Crazies,

Licia is “going yard” on the candlestick charts.  If you missed last night’s event, you can find out more here.

True story on Wednesday morning my wife and I were talking and she was wondering what the heck is all the Fed stuff. She said, “I don’t remember you talking about the Fed at all, just that volatility stuff and we are short too many puts and will lose the house.”  (I added the last part.)

What she does not know is the Fed has taken an outsized role in the economy since 2008.  All the QE nonsense and machinations have left the US markets stuck on the Fed.  The Fed simply has too much power.  Back in the day, what the Fed was going to do was preordained.  That is the trading my wife remembers.

Also, every Fed intervention has been unnecessary and very political for the last 15 years.  Now they have to fix it.  20 years of bad policy has to be fixed and I include all presidents.  Inflation is not going down and my wife hears about it at the grocery store every week.  I take her anecdotal evidence seriously.  Folks spend.  It has been said over and over this year, but without the Big 7, there would be scant rally in SPX for 2023.  Bargains abound.

SPX 30-day chart with 1-day candles

Remember yesterday I said 4500 would be in the cards if there was no rate hike?  

I forgot about the dot plots.

My VIX indicator said a 1% move or more

I have to admit I leaned into it a bit on Wednesday.  Bought some SPX call flies struck at 4500 and spent some of the dough I made in Trading Desk and Easy Button trades.  I leaned a bit longer than I should have and added more Delta Wednesday.  On the flip side, I own a lot of puts in the SPDR S&P 500 Trust ETF (Ticker: SPY) in many products I manage so it was still a good day.

But I had ideas of 4500 and big home runs.  The Fed crushed that with their dot plots.  They are only going to lower rates once next year.  Of course, all of that could change but they still rule the roost now.  If only Uncle Sam would stop spending, the Fed could stop enabling them.

I own spreads in SPY in one of my services in good size.  I doubt if the market will drop enough for those to be home runs but I will likely close them today or Friday.  This market is just in the 4300 to 4500 range and for good reason.  Other stocks need to hold a bid.

My VIX9day VIX30day indicator still delivered the goods  Stocks moved more than the implied vol said and VIX closed Wednesday on a high.  Will it keep it up?  My guess is not.