I tried many strategies trading SPX and none worked to my satisfaction. Then I decided to trade “SPX crumbs”. And you may ask, what is SPX crumbs? It is a trade with a very small premium trading standard verticals like spreads, Iron Condors or broken wing butterflies.

In the past trades I tried to maximize premiums. I was timing the market. When it was bullish, I opened a put spread and usually with delta 30 or sometimes even delta 40 or 45. This worked well in trending markets. And of course, it worked well until it didn’t. And since 2022 we were in a bear market and volatile market. And this trading stopped working. So, I was looking at something that would work better.

I came up with trades traders may consider not worth it. Why? Because according to a common knowledge, I will be “risking too much to make very little.” In the past, I have read on the internets and in forums that if I traded a $10 (or $1000) wide spread and make only $20 premium, that it was bad. The risk reward was too bad. But I found it not bad if you take into account probabilities. And I realized that picking up crumbs from the table is worth it if I can do it again and again and sleep well. So, yes, that $20 (after fees) is a crumb not worth it to you, but very valuable to me.

Here is a list of trades I took so far last month and in October. Despite markets moving up and down like crazy, all trades ended up winners:

If I can repeat this process again and again every month, I will make quite good income (as of today, the projected income would be almost $30,000 a year, given the winning streak will continue). And those little crumbs will add up over time.

Allegedly, the markets want inflation to go down and we are now bearish because it is not doing what we want. That’s what investors say by turning bearish again after inflation data we received on Wednesday and Thursday.
 

But no matter how you slice it, inflation is going down. These fluctuations month to month do not matter. All the wobbly spooky mood of Wall Street over a short term fluctuations are not necessary and to be honest – plain stupid. But if you have been in the markets for long enough, you know that it is how Wall Street acts. The old adage says that the markets discount future (or it looks at the price 6 to 18 months ahead). But based on the investors behavior they do not foresee anything beyond the tip of their own nose.

So the bearishness on Wall Street continues. Today, the market will most likely finish red and we may see a continuation on Monday too.

So the most recent inflation data (September CPI report) indicated that all the fears out there on Wall Street is overblown. But that is what you would expect from investors who normally (when the markets rise) claim to be long term value investors but start haphazardly selling their “long-term” investments as soon as it drops a few points.

What we saw from the CPI report so far was that wages inflation is a bit sticky but easing, rent inflation is stickier but easing too, and economy and the labor market are still very strong pointing to the soft landing. But naysayers, and there is plenty of them, will tall you otherwise. And some of the FED officials are already admitting that the current 5.25% rate level is restricting enough to keep the economy from overheating but not damaging it and sending it into a recession. Good news for the markets although they still do not see it that way. But even the biggest pessimist will come to this realization one day.

The good news is that the core CPI inflation rates (excluding shelter) rose just 2.0% each during September. These two measures of inflation are already at the Fed’s 2.0% target! Price inflation has turned out to be remarkably transitory after all.

On another note, we just found out that there is $1 trillion more savings sitting on the sidelines waiting to be invested than anyone expected. How can you miss a trillion dollars?
 

That being said, we are at the beginning of correction recovery and a new bull market.

Today, the investors are digesting (of course) the CPI report. The markets opened lower but we see a few bullish signals on the charts. The market may be flat to bullish today. We may even end in green by the end of the day.

We had an impressive rally this year, so far. But then the markets stalled on all sorts of old fears – inflation, interest rates, higher for longer, and so on. We lost over 5% in September and October isn’t looking any better.

We are in a recovery mode for sure. Naysayers will keep posting their rants about recession but that is not coming (at least not yet). It will eventually come but not this year and most likely not the next year either (it may come at the end of the next year, but I do not see any fundamental reasons for it). Recession is when people lose jobs, companies stop hiring and their earnings dwindle. But the labor market is strong (which brings fears of pricing pressure and high interest rates) and earnings are holding well and rising again (just look at the most recent Pepsi’s earnings). There are no signs of a recession at all. At least not yet.

The market futures went up in expectations of a PPI report which came in hotter than expected and the last three days strong rally dwindled again. Wednesday’s trading will be weak and we may even close down. But the rally will continue.