To The Moon

Thanks to Tiger for awarding the weekly top predictions for SPY again! Managed to secure 77% gain on Friday without a red day this week 🙏

The annual Fed conference unveiled a mix of hawkish and dovish insights from the Federal Reserve, ultimately providing a reassuring tone to investors.

At first, the Fed Chair Jerome Powell‘s statements carried significant weight to cause a dip in the market. Despite underlining the Fed’s commitment to raise rates further if necessary, Powell also remarked that it will proceed carefully and base decisions on data-driven assessments.

From Powell’s more hawkish tone, indicating the readiness to further hike rates if circumstances dictate, divergent sentiments emerged from other Fed officials. Philadelphia Fed President Patrick Harker‘s message exuded caution, leaning towards a preference for maintaining the status quo on interest rates.

Speculators, sensing potential policy shifts, raised their bets on a rate hike in November, pushing implied probabilities above 50%. Despite this uncertainty, the broader market showcased resilience during the symposium’s opening day Friday.

All system go... GREEN

All three major U.S. stock indices concluded the session on a positive note, demonstrating a collective upward trajectory. The S&P 500’s 11 sectors followed suit, with every sector in the green. Volatility, gauged by the “Vix” fear index, saw a notable drop of 10%, reflecting calmer market sentiment.

The SPY ETF turned the tide with a 0.8% increase, snapping a streak of three consecutive weeks of losses. The ETF closely mirroring the S&P 500 index enjoyed positive price action throughout the latter half of the trading day. Friday’s rebound partially offset the 3.5% dip observed since the beginning of the month.

All ETF soared on Friday

In an interview with Bloomberg TV, Chicago Fed President Austan Goolsbee underlined his dovish stance, aligning his views with those who remain hesitant about aggressive tightening measures.

Goolsbee emphasized the ongoing unfinished work of the Fed, remarking that “inflation is still higher than we want it to be.” Expressing a guarded optimism, he mused about the rare scenario where the Fed could conquer inflation without an accompanying recession, describing it as a potential “major triumph” with no historical precedent.

Goolsbee emphasized the importance of data-driven decision-making, suggesting that the real rate – which subtracts the inflation from the nominal interest rate – remains a pivotal gauge for measuring the intensity of monetary tightening.

The dovish view of the Chicago Fed President emerged when he said that holding nominal interest rates at 5.5%, as inflation goes down, is implicit to more tightening.

Buy call

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Buy call round 2

Swing call

Buy call round 2

The barrage of statements from Fed officials prompted a favorable response from the stock market, leading to a 0.8% increase in the SPDR S&P 500 ETF Trust (NYSE:SPY).

Time to gear up and say goodbye to August weakness and stay nimble on what suspicious September may bring. A weak CPI reading would cause Fed to pause rates hike and send the market soaring yet again! 🚀

Weekly options trade summary 

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