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Weekly Report 2022-10-16

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WEEKLY MARKET SUMMARY 

Trying to make sense of a market like this (especially after what happened on Thursday and Friday) is becoming an exhausting and even pointless exercise. What I like to do after another crazy week of a crazy year is zoom out to longer time frame charts like the weekly and monthly ones.

On a weekly time frame, SPY (S&P500 ETF) is still in a clear downtrend (lower lows and lower highs), trying to decide if the 360 level is really the bottom of this correction or if we'll need to go to test the support at the pre-pandemic highs around the 340 mark.

On a monthly time frame instead, the SPY chart is simply showing a pretty normal correction within the strong bull market that started after the 2008 global financial crisis. During the moment, these pullbacks all look like the world is about to end, but when viewed from a further distance, it's much easier to keep them in the right perspective.

 

Weekly market performance (Week 41/2022)

 S&P500 (SPY) -1.42%
 Nasdaq100 (QQQ) -3.11%
 Dow Jones Industrial (DIA) +1.31%
 Small Caps (IWM) -1.07%

With the broad market still highly unstable, the Market Volatility Index (VIX) remains quite high, just above the 32 level.

 

WEEKLY TRADING SUMMARY 

The Wheel Strategy is my bread and butter strategy, the one after which I named this blog, the one that I regularly use in the Options Trading Club (OTC) and that I teach extensively in The Wheel Academy. However, in market conditions like these, even a robust strategy like the Wheel tends to not perform at its best.

This week I was able to close for full profit covered calls on ARKK, EBAY, TNA, WDC, and XBI, retaining a total premium of $307. More covered calls are due to expire worthless at the end of next week and bring a much higher premium. Of course, it's not nice to hold shares that keep going down, but the consistent cash flow I can generate by selling calls against my portfolio is helping to lower the adjusted cost of the shares and reduce the overall risk of the portfolio.

During this difficult trading year, one of the best uses of my time has been in education. While waiting for the market to bottom and resume its longer-term uptrend, I decided to sharpen up on my options and trading knowledge. Books are always an interesting and inexpensive resource to consider. My friends at Hashtag Investing compiled a list of option-related books. You should look into some of them to see if they can help you improve your skills in this challenging but fascinating craft.

As usual, if you have any questions or suggestions, just send me an email at [email protected]

Take care and trade wisely!

Gianmarco 

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