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Free Market Outlook this week for all paid/free users.

I post daily and weekly market outlooks for all our Live Trader members on the Discord platform. Since we are basically going through a Market Crash like situation, I am trying to share my thoughts with all users this week. 

Market Outlook for the week of 3/7 – 3/11

A ton of uncertainty, keep trading volume low.

 

After putting in a potential double bottom on 2/24, markets have made a pretty decent attempt at a technical recovery. But as I have been mentioning all along, with VIX levels this high and the war situation worsening, trying to trade on only technical indicators is not the most reliable approach. The only prudent thing to do is to keep an eye on support/resistance levels on the Indices and keep trading volume extremely low until VIX drops back below 22.   

With the War situation worsening and everybody getting tired of it, the world is already expecting the worst outcome. Any news of a resolution is bound to catapult the markets into recovery. Also, note that we have FOMC meeting coming up on 3/16 which is almost a binary event.  

Macro-economic events next week

There is not

  • Mon – Fri – WAR!
  • Thursday – Jobless Claims and CPI data
  • ALERT: Wednesday 3/16 – FOMC Meeting.

What to watch for in Earnings next week :

Earnings season has almost passed us with a handful of earnings reports still remaining. We have 5 stocks from our list reporting next week, but I will continue to keep trading volume low to approx. 2-3 trades next week.  

Macro Analysis

IVX remains extremely high and I don’t expect it to show any signs of pulling back until there is some kind of positive outcome on the Ukraine front. A favorable market reaction to the upcoming FOMC meeting on 3/16 could also offer a huge helping hand. 

SPY observations – (Ignoring QQQ/DIA this week as they are all moving in sync)

The markets double bottomed last week and made a valiant effort to rise from the ashes. But we got hit by another bad news of the nuclear reactor in Zaporizhzhia being taken over by Russian forces. That caused is to gap down hard but we ended up on Friday recovering some of those losses. 

What to watch for in the coming week

  • VIX above 22 will keep volatility in the markets.
  • Bullish: If SPY takes out $440, we start entering the safe zone. Breaching $450 resistance marks a recovery in progress. 
  • Bearish: The market is over-sensitive to news, and if we breach $420 again, the possibility of SPY going to $400 cannot be ruled out.

IWM observations (Range-bound)  

  1. IWM has become range-bound in the short term bouncing between 191 and 205. Trades could be taken at the lower end of the range. 
  2. Keep trade size small as this entire market is vulnerable to “headline risk”. You could also take Bear Put spreads at the upper end of this range to balance out any call spreads you may have, but don’t go over-board with trading volume in general. 

Bitcoin (range-bound)

  1. We have been using Bitcoin as a measure of the market’s “risk-on” sentiment and it has become rangebound between 35k – 45K. This further reflects the indecision and lack of conviction in market participants.
  2. Bitcoin needs to blast past 48K for a bull scenario t play out. 

Portfolio Allocation:

As we head into the 3rd month of this “market crash”, I have been keeping my trading frequency very low. I haven’t stopped trading and am still taking small trades on every sign of a recovery.  

Key Takeaway: War situation continues to hold this market hostage. FOMC meeting on 3/16 could move markets. Technical analysis indicators are not useful with elevated VIX levels. Watch price/action, support/resistance and keep trading volume low. 

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