Markets Took a Punch - But We Didnt
Weekly Macroview and Game Plan – Oct 11
Last week we said SPY had to hold 660 to 662 and QQQ had to keep 598 to 600. Both levels cracked right on schedule. We saw this setup building from our weekly game plans and played it accordingly - light sizing, waiting for red, and letting the market come to us. When the tariff headlines hit, the shelves gave way just as expected. SPY dropped into the low 650s. QQQ flushed to 590. IWM fell straight to 236 to 237. Crypto followed the move. That’s how pullbacks are supposed to feel when you’re positioned right.
Sentiment first: Fear and Greed
The Fear and Greed Index sits at 29 (Fear) - down from 53 (Neutral) last week.
Translation: fear came back fast.
Fear doesn’t mean panic. It means sellers have likely exhausted some fuel, and sharp bounces can happen out of nowhere. But it also tells you to slow down and stick to plans. Neutral to Fear is the kind of sentiment shift that creates clean opportunities for patient traders, not for chasers.
What just happened
Friday’s selloff was driven by headlines around new tariffs, export restrictions, and a wave of profit taking after a strong third quarter. When markets are near highs and bad news hits, weak positions exit all at once. That is why volume spiked and candles stretched.
The important thing to remember is that the first move after a headline is often wrong. Bonds and the dollar will tell the truth. When they calm down, equity direction becomes clearer.
Trend check: where the charts stand
SPY
We lost the 660 shelf and landed near 652. The 50 day moving average sits close to 645 and becomes the key support zone this week.
Support: 650 to 652, then 648 and 645
Resistance: 656 to 660, then 662 to 666
If SPY can defend 650, expect a bounce toward 656 to 660. Lose 648 and we likely test 645. Below that, tone shifts from pullback to correction
QQQ
The 598 to 600 gate failed and price stopped on the 590 pivot. The 50 day is near 575.
Support: 590, then 586 and 580
Resistance: 596 to 600, then 604 to 608
Holding 586 to 590 gives room for a rebuild toward 596 to 600. Lose that area and sellers likely push to 580 or 575
.
IWM
Small caps tagged 236 to 237 before catching a small bounce. The 50 day sits near 231.
Support: 236 to 237, then 233 to 234, then 231
Resistance: 239 to 240, then 241 to 242
If buyers reclaim 240 and hold, breadth can stabilize. If 236 breaks, expect a quick check to 233.
The week ahead
Earnings season begins this week and will help set tone into mid October. This week was supposed to be CPI week. The Bureau of Labor Statistics still plans to release September CPI, but the government shutdown could delay it until Oct 24. Even if it comes on time, expect volatility around the print since it drives Fed expectations and the COLA adjustment for Social Security.
Bank earnings Tuesday Oct 14: JPMorgan, Citi, Goldman, and Wells Fargo report before the open. Credit quality and deposit costs will be the focus.
Tariff and policy news: If tensions ease, yields may fall and tech can bounce. If they escalate, risk-off continues.
Crypto: Still tied to dollar strength and liquidity. Expect volatility to remain high until macro stabilizes.
Bottom line: let bonds and the dollar confirm direction before adding risk.
What the Street is saying
The drop was headline driven, not a breakdown in fundamentals.
Positioning was moderate, meaning forced selling was limited.
Semiconductors and large cap tech will lead the repair.
Desks still favor buying dips near the 50 day averages as long as yields do not spike again.
Wrapping it up
Base case: Panic cools off. SPY holds 650 to 652, QQQ holds 586 to 590, and IWM holds 236 to 237. A bounce back toward SPY 656 to 660, QQQ 596 to 600, and IWM 239 to 240 would follow.
Risk case: Tariff headlines or rising yields continue. SPY loses 648 and tags the 645 50 day. QQQ slips below 586 and tests 580 to 575. IWM loses 236 and drifts to 233 to 234, possibly 231.
The first move after big data or headlines is usually a head fake. Wait for confirmation before pressing risk.
Trading bias (CSP and short vol lens)
Fear levels create opportunity but only if size and patience are managed.
When to sell
Look for red mornings, higher implied volatility, and tags of support. Use 7 to 14 day expirations and choose strikes you would be comfortable owning.
Sizing
Keep total collateral between 25 and 45 percent until SPY and QQQ prove support. Add in thirds only if SPY 650 and QQQ 586 hold.
Management
Take profits around 50 to 70 percent. If price closes below your strike or delta climbs above 0.35, roll down and out one to two weeks for credit. If the trade breaks, close and reset.
If assigned
Sell covered calls 7 to 14 days out around 0.30 to 0.35 delta. Focus on consistent return on capital instead of tops.
In higher volatility
Short put verticals or defined risk spreads work best when headlines are unpredictable.
Friday tactics
If major headlines hit premarket, let the first 15 to 30 minutes set direction. The best entries usually come after that, not at the open.
We took the punch but stayed standing because we had a plan. The goal this week is the same. Follow the structure, stay patient, and trade what the market gives you.