Noise, Narratives, and the Next Move

Welcome back to Hitting the Bid Weekly!

Around the Market

The bid continues — SPY up again this week!

The S&P 500 (via SPY) gapped up to start the week, continuing a strong run since bottoming out on April 7. Over the past week, SPY is up about 3.5% (from May 5 to May 12 close), and it’s now rallied roughly 21% (🤯) since the $481.80 low just over a month ago.

Other notable market moves since last week:

• Volatility (VIX) continued its slide, now in the upper teens with the Vix term structure back in its more typical state of contango

• Gold rose from ~$3,320/oz to nearly $3,450, then retraced to $3,228

• Bonds tried to rally but ultimately sold off to 113’16, gaining bearish momentum

• The US dollar is very strong recently, closing at 101.79 on Monday, continuing a push above 100

• Crude oil prices were strong all week going from $57.13 to $61.95, though off its $63.61 high

• Bitcoin crossed $100k and hit $105,600 before settling around $102-$103k on Monday

The Week Ahead

Economic Calendar

• U.S. Producer Price Index PPI (Thu 5/15 8:30a ET)

• U.S. Retail Sales (Thu 5/15 8:30a ET)

• Fed Chair Powell Speech (Thu 5/15 8:40a ET)

• Michigan Consumer Sentiment Preliminary May data (Fri 5/16 10a ET)

Notable Earnings

• Cisco Systems CSCO (Wed 5/14 after close)

• Alibaba Group BABA (before open Thu 5/15)

• Walmart WMT (before open Thu 5/15)

• Home Depot HD (before open Tue 5/20)

Not an exhaustive list — just a few I’m watching closely for potential market impact.

On My Radar

ICYMI — Hitting the Bid is now on YouTube. Last week, I entered a neutral crude oil trade, and you can check it out here. For this trade, I plan to let time pass and volatility come in, closing the position at 35% of potential profit or 21 DTE, whichever comes first.

This week, I'm eyeing the bond market after recent weakness. I may size up a trade in /ZN (10-Year T-Note futures).

• The 10-Year Yield (/10Y) surged from ~4.16% to ~4.47% over the past 2 weeks — a level we last saw in early April

• Reminder: Bond prices move inversely to yields

This trade setup is similar to the crude oil trade from last week - At a minimum, I want to see:

• A price level hold — in this case, prices around 109-110

• Positive momentum — a green candle closing above the prior day’s high or above the 5-day EMA

Not into futures? Consider IEF, which has decent liquidity, tight spreads, and solid open interest — though I prefer futures for the bigger size.

What’s Top of Mind

During these past few months, it’s pretty apparent we’re in a market driven by headlines and social media.

Case in point: On April 9, SPY jumped from ~$500 to closing at a little over $543 — an 8.6% move that helped to add almost $5 trillion in market capitalization to the U.S. stock market in less then 3 hours. All triggered by a single post.

We’ve seen similar — though less dramatic — moves throughout the past month, and the headlines haven’t let up. Here’s an example that illustrates the point. (Note: I’ve removed names, since I don’t know who’s accurate here.)

And here’s a response to that post…

Now imagine if this had occurred during market hours.

• How does the market respond?

• Who do you believe?

• Which, if either, is signal and which is noise?

We are in an age where we are completely inundated with content, and it is on us to figure out what we do with all of this information. There are opportunities abound, on both the long and short sides, and if one is willing to take the risk, you can be rewarded for it — sometimes very significantly — if you’re able to ride the wave.

While some traders are trying to surf that wave, others are tuning it all out, sticking with strategies like DCA (dollar-cost averaging) or waiting patiently for pullbacks to buy.

There’s no “one right way” — only what fits your risk tolerance, time horizon, and willingness to sift through the noise in search of actionable signals.

Can you figure out what is signal and what is noise? Yes. Will you do it? You decide.

Like what you’re reading?
Forward this to a friend or share the newsletter link to help grow the HtB community.

Hitting the Bid content is for informational and entertainment purposes only. The information contained is not, nor is it intended to be, trading or investment advice or a recommendation of any security, futures contract, digital asset or alike. Trading and investing contains risk. All investors should evaluate their own risk tolerance, financial situation, and investment duration before entering any trade or investment.