Weekly Wisdom: A Trendless Market

Greetings fellow traders and welcome to your February 23rd edition of Weekly Wisdom: Levels to Know and Moves to Look For!

Let's get to what we're currently seeing in these crazy markets and what we have our focus on going forward.

Taking a look back on this week, February 20 - 24:

• Bears are finally victorious this week after a solid month plus of pain for their team with the uptrend officially ending as $SPX futures traded down below 4000,?into the 3980s on Wednesday and Thursday. This leaves us with a trendless market and a messy process of price discovery.?
• We’ve discussed in the past the gap between what the Fed Fund Futures are pricing and what the Fed members have been implying where rates are headed. The market has been correcting itself to the Fed, with Fed Funds Futures rising over the past week plus after being stuck at a peak of 5% for months. The peak terminal rate is now approaching 5.37% between July - September, with March showing a roughly 21% chance of a 50bps rate hike.??
• $VVIX interestingly enough has started to show some positive divergence on its daily chart, trading down as low as 86 on Thursday with the week high coming Tuesday just shy of 97. This 97 high is lower than the 100 high made back on February 9th which was also a big down day for $SPX - is this a sign $SPX holds 4000-3950 big picture?
• $VIX is also off highs of the week made Wednesday in the mid-23s. This made a lower high in the mid-22s on Thursday despite $SPX breaking below Wednesday’s low, another positive divergence sign of 4000 support building out.

And here's what we are eyeing next week, February 27 - March 3:

• As mentioned above, keep tracking $VVIX and $VIX as positive divergences have started to build out with $VVIX making a lower high on the daily chart in the month of February despite $SPX making a lower low. This was the same sign that signaled the bottom back in October.
• If this is building out as a positive divergence, $SPX should not trade under 3950 as it chops 4000 and gets ready for back to 4100-4200. Bears should start to feel uncomfortable again above 4075.??
• If time goes on (let’s say a week or so) and $SPX cannot reclaim 4075-4100 while $VVIX and $VIX keep cooling off, this will be a more bearish setup as the market risks bounces in $VIX.?
• $SPX back over 4075-4100 is a short term victory for the bulls; no reclaim over there in a week is a short term victory for the bears.??
• On Monday, February 27th we’ll get data for durable goods orders m/m and core durable goods orders m/m at 8:30 a.m. EST.?We’ll also get January pending home sales m/m at 10:00 a.m.??
• On Tuesday, February 28th we’ll get Chicago PMI at 9:45 a.m. EST, followed by the Conference Board's consumer confidence index and Richmond Fed manufacturing index at 10:00 a.m.??
• On Wednesday, March 1st S&P Global's final manufacturing PMI is released at 9:45 a.m. EST, followed by ISM manufacturing PMI, manufacturing prices, and January construction spending at 10:00 a.m.
• On Thursday, March 2nd we get weekly jobless claims, revised unit labor costs q/q, and revised nonfarm productivity q/q at 8:30 a.m. EST.
• On Friday, March 3rd S&P Global's final services PMI is released at 9:45 a.m. EST followed by ISM services PMI at 10:00 a.m.?

Here's Your Chart of the Week:

Via Bloomberg Finance L.P.:?Another chart that speaks for itself and possibly spells trouble for the future - US Mortgage Payments as % of Income reaching new multi-decade highs?

Source: https://twitter.com/WallStJesus/status/1627665804715073536

SPY Daily / Weekly Update:

$SPY daily chart has officially made a lower high and a lower low, ending the weekly uptrend and giving the weekly chart a mixed picture. Bears are now in control on this daily chart as long as $SPY remains below 405.

$SPY broke down back below 400, negating the 1/29 weekly bar low as $SPX Futures lost the 4000 level. We now have a lower high but no lower low on the weekly (would need to lose 375 to establish real downtrend) - leaving us with a trendless market as we no longer make higher highs and higher lows.

Don't miss the next edition of Conversations With A Pro Trader on February 28 with Scott Redler, register here now!

Want to Trade With My Team? Click here!

-Patrick Hawe

Disclosures

Patrick Hawe's current positions:

*As of 4:00pm ET February 23, 2023

?

Patrick Hawe is an Associated Member of T3 Trading Group, LLC (“T3TG”), a SEC Registered Broker-Dealer & Member of FINRA/SIPC. All trades made are placed through T3TG.

T3 Live, LLC is a financial publisher that disseminates information about economic, business, and capital markets issues through various media. T3 Live is not a Broker-Dealer, an Investment Adviser, or any other type of business subject to regulation by the SEC, CFTC, state securities regulators or any “self-regulatory organization” (such as FINRA). Although T3 Live and T3TG are affiliated companies by virtue of common ownership, the companies are managed separately and engage in different businesses.

The programs that T3TG distributes (including articles, commentary, videos, blogs and social media postings) are for informational and educational purposes only. No one should consider the information disseminated by T3TG to be personalized investment advice, a recommendation to buy, sell or hold any investment, an offer (or a solicitation of an offer) to buy or sell any investment, or the provision of any other kind of investment advice. No one associated with T3TG is authorized to make any representation to the contrary.

T3TG provides information that viewers of its programs may consider in making their own investment decisions. However, any viewer will be responsible for considering such information carefully and evaluating how it might relate to that viewer’s own decision to buy, sell or hold any investment. Such decisions must be based on that viewer’s individual and independent evaluation of his or her financial circumstances, investment objectives, risk tolerance, liquidity needs, family commitments and other factors, not in reliance on any information obtained from T3TG.

Statements by any person (whether identified as associated with T3 Live, T3 Trading Group, or any other entity) represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.

It is possible that any individual providing information or expressing an opinion on any T3TG program may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual or it may reflect some other consideration. Viewers of T3TG programs should take this into account when evaluating the information provided or the opinion being expressed.

Although T3TG strives to provide accurate and reliable information from sources that it believes to be reliable, T3TG makes no guarantees as to the accuracy, completeness, timeliness, or correctness of any such information. T3TG makes no guarantee or promise of any kind, express or implied, that anyone will profit from or avoid losses from using information disseminated through T3TG.

All investments are subject to risk of loss, which you should consider in making any investment decisions. Viewers of T3TG programs should consult with their financial advisors, attorneys, accountants or other qualified professionals prior to making any investment decision.

The risk of loss in trading equities, options, forex and/or futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage that is often obtainable in options trading may benefit you as well as conversely lead to large losses beyond your initial investment. Past results are not indicative of future results. No representation is being made that any account will or is likely to achieve profits similar to those shown.

T3 Trading Group, LLC is a Registered SEC Broker-Dealer and Member of FINRA/SIPC. All trading conducted by contributors associated with T3TG on the Virtual Trading Floor is done through T3TG. For more information on T3 Trading Group, LLC please visit www.T3Trading.com.