by Mahesh Kalbhor | Nov 15, 2021 | Weekly Update
Market Recap
• All of the Indexes closed small percentages over the course of the week due to inflation fears (after CPI report on Wed), but we had a nice rally day on Friday to offset some of those losses.
• We are now staying below the all-time highs we set about a week ago, and that high will be resistance in the future. I think we will consolidate around this level to provide some support and filling after the big run-up. That could mean a choppy price action. Remember that November and December are traditionally good months for markets in general.
• Support at $SPX is likely 4525/4550 which is still 100 points below current levels.
The 10-year Treasury yield and the US dollar made some big upward moves through the week’s end.
VIX
The VIX or the fear indicator was also noticeably higher in the middle of the week (almost touched 21 on wed 11/17), but then fell again at the rally on Friday. The indicators based on VIX and its derivatives remain generally bullish for stocks so far. Additionally, $ VIX remains trending down as the 20-day moving average of $ VIX is still below the 200-day MA.
Put-Call Ratios
The put-call ratios for pure stocks remain solid on buy signals as they continue to fall rapidly. As long as they go down, that’s bullish for stocks. The ratios are approaching the lower regions of their charts. That is, they are “overbought”. But they won’t produce confirmed sell signals until they roll over and start an uptrend.
What to Watch
• The latest retail sales number for October will be highlighted with some real estate reports.
• Quarterly earnings remain slow, but several retailers are expected to announce this week, which is in line with retail sales numbers expected on the Tuesday before the opening.
• BTC (Bitcoin) pulled back after a strong rally as many traders await another surge on possible new highs.
• Retail and home sales on Wed.
• Manufacturing index Friday
• Earning reports continue
○ Retail – WMT, HD, LOW, TGT
○ Chinese stocks including – BIDU, JD, BILI and BABA
○ Tech – NVDA, LCID and AMAT
Watch List:
AAPL – $146 to $153 – range bound for the time.
DIS – Sold off on earnings news. Maybe support around $153 for a bounce back.
DKNG – $40 looks like next area of support. Either it holds or we head lower to $35
FB – $320 now looks like support – $350 next area of resistance. Long.
LCID – forming a pennant – break and hold above $46 for next leg up.
PYPL – Looks like it is trying to hold that $200 level – Got long with bull put credit option trade.
RBLX – looks strong and could challenge high of $110. Long.
TSLA – Took a big hit on news of Musk stock sale – $900 critical level of support now.
MSFT – Long 21 Jan 2022 calls
AMZN – The stock has been holding its own, and the 50-day moving average around the $3,400 level may be a good area to set up another bull put spread on this monster of a stock.
AMD – After ripping higher over the past month and a half, the stock pulled back last week. On Friday a buy setup triggered, which may lead to bull call spreads.
Current News :
• Airbus receives first major deal since start of Covid-19 – (Read Here)
• Shaq’s newest store-front in his food empire – Read Here
• Toshiba announces split – Read Here
• Bitcoin upgrade: What’s next? – Read Here
• Johnson & Johnson Split – Read Here
• Apple’s Digital ID – Read Here
Trade safe ..!!
by Mahesh Kalbhor | Nov 9, 2021 | Weekly Update
When it comes to Tesla, there is always plenty of the random volatility and the brainchild behind all this is Elon Musk (CEO of TSLA) and his (sometimes entertaining) tactics.
There has been talk about creating a “wealth tax” on unrealized capital gains for very wealthy individuals — like billionaires. That means they’d pay taxes on money they effectively don’t have. The logic here is that tax program can generate far more revenue for various spending programs the govt wants to spend for exmaple $1 trillion infrastructure bills. Some billionaires are in favor of this, but Elon seems like not in favor.
On Saturday 11/6/2021, Elon created a Twitter poll that said the following:
The funny thing is that “Yes” got the bulk vote and this caused the classic dump for Tesla stock and still crashing (at the time of writing this blog) as retail investors trying to get out before Elon’s big potential sale if at all happens.
I shorted TSLA yesterday using bear call spread and got out today for quick profit.
To learn more about options click following link:
Courses
by Mahesh Kalbhor | Oct 26, 2021 | Weekly Update
Big Earnings Week
Stocks continued their march higher this past week as the Dow and S&P 500 touched all-time highs with implied volatility levels dropping to levels last seen over the summer. Although Nasdaq did not move to new highs, it still closed well above its 50-day moving average like the other two.
This week is a huge one as far as big-name stocks expected to announce earnings ( Apple, Amazon, Alphabet, Microsoft and FB) . Clearly the results could keep this bullish train running higher or derail it in a big way. In addition, there are some economic reports due out this week, including several housing reports and the latest GDP figure.
Oct 28: Jobless Claims
Oct 28: GDP
Oct 28: Pending Home Sales
Oct 29: Personal Income and Spending
SPX at new all-time high
In figure 1, the resistance line (horizontal blue line) at the highs is rather wide hence there is still a chance that $SPX is merely at the top of a trading range that extends roughly from 4300 to current levels, at 4550. A clear breakout above 4560 would be strong bullish signal. One thing to notice is that there are so many gaps on the $SPX chart (three in last week) . Gaps like this are often filled. If they are to be filled soon, then the trading range scenario would make some sense. Of course, not all gaps are filled. Look at two circles on the chart in Figure 1 – these GAPs were not filled, even though they occurred months ago – in April and May. The point is that we should stick with indicators and not rely on gaps being closed.
Put-call ratio
The equity-only put-call ratios have reversed course over the past week and have generated buy signals.
VIX structure
The construct of volatility derivatives is bullish for stocks, as well.
The Nov $VIX futures are now the front month, and they are trading with a considerable premium over $VIX and they are trading well below the price of Dec $VIX futures.
The term structures of the $VIX futures and of the CBOE Volatility Indices continue to slope upwards. Those are all bullish signs for stocks
Earnings week
– FANNG stocks reporting this week. Guidance from these will dictate how they trade post-earnigs.
– Interest rates continued to climb last week – a break about 1.8% will be significant if it happens. On a weekly basis we are in an uptrend.
– The US dollar was down Monday then spent the rest of the week chopping in a range.
Sectors in Play
• Energy continues to be near its highs and could be consolidating before continuing higher..
• Gold and silver had an good week – started a position.
• Financials are really doing well in this rising interest rate scenario and after earnings.
What to Watch
• For the coming week, as usual keep a close eye on the 10 yr treasury yield – a continued rise will likely put some downward pressure on the QQQ.
• Even more important will be the raft of earnings reports this week and comments on guidance from some of these big name companies.
• Possible US dollar weakness for rally in metals to continue.
Watching:
AAPL – $150 level is resistance again. Apple reporting Thursday 10/28 after market close – will watch for a trade after the report and depending on reaction .
FB – Reported on 10/25 Mon. $300 is significant area of support as it already dropped 5% post earnings .
GS – if it gets to previous high of $415 could be a good short for rejection at that level.
PYPL – $235 could be support. PayPal tanked hard from $271 to $242 due to possible PINS takeover. It’s not happening after talks with shareholders. Earnings report Nov 8
TSLA – “Hertz Orders 100,000 TSLA model 3 cars for rental fleet” – this news boosts Tesla Value to $1 Trillion ; TSLA almost at $1095 but pretty extended at this level. Possible bear-call spread after $1100
NVDA – The $228 level looks like decent resistance for the stock. A surge and hold above that level could trigger some potential bull call spreads.
Crypto –
COIN – reports on 11/10 ; Watch for pullback post-earnings ; Big Support at $225
by Mahesh Kalbhor | Oct 12, 2021 | Weekly Update
The House of Representatives approved legislation to boost the U.S. debt ceiling. The bill, approved by the Senate last week, now goes to President Joe Biden’s desk for his signature and enactment. He’s expected to sign it later in the week.
The Senate approved last week to raise the Treasury Department’s borrowing limit until sometime around the beginning of December 2021. They voted on offering another $480 Billion in borrowing to the Treasury. The US defaulting on its debt is unthinkable. Default could cause an enormous financial crisis round the world. The world’s best interest that America don’t default. The legislation, which cleared the House with a party-line vote of 219-206, would extend the debt limit by $480 billion.
The current debt is $28.4 trillion and would be permitted to rise to about $28.8 trillion.
While the president is expected to sign the bill, failure to try to to so would end in economic calamity by Oct. 18. Congress knows this. They’ve raised the debt limit zillion times. Standard & Poor’s actually downgraded the US’s credit rating from AAA to AA+ in 2011, when the debt limit battle was quite fierce.
Not sure that legislators want to deal with this debt ceiling issue again and again, especially in such uncertain times amidst a hyper-polarized government and political environment.
One other thing: many of the same legislators involved in 2011’s debt ceiling negotiations are presiding over this one as well: Pelosi, Biden, Hoyer, and McConnell all did this 10 years ago. Time will tell. Till then enjoy the S&P ride.
by Mahesh Kalbhor | Sep 13, 2021 | Trade Idea, Weekly Update
Friday 9/10/2021 was a pretty bearish day for the markets in general. Every single index gapped up higher but sold off quickly into the afternoon to go out near the lows of the day. The SPX put together 5 red days which we have not seen since February. Seasonally, Sept is one of the worst for the markets based on history but with interest rates so low, buyers will likely continue to support this market. With the S&P 500 closing lower over the past five sessions, it shows that market pullback has started already. Implied volatility levels moved higher ( VIX > 20 ) closing at levels not seen in several weeks.
We can expect to see choppier price action this week without much in the way of news or earnings to provide some catalyst for moves. Don’t expect any big sell offs. In nutshell, this week outlook is chop with maybe a little more downside action.
Economic calendar this week –
• Sep 13: Federal Budget
• Sep 14: Consumer Price Index
• Sep 15: Import Price Index
• Sep 15: Industrial Production
• Sep 16: Jobless Claims
Here are some trade ideas:
SPX – With five consecutive closes lower, stocks may continue to fall. Call credit spreads with expiry Sep 24 looks good.
AAPL – possible long if it breaks down to $142.5- $145 – AAPL has an event ( new iPhone 13 phone launch ) coming up on Tue 9/14/21. Buy the rumor and sell the news
NVDA – The stock has been trading sideways for several sessions. Iron condors around potential support and resistance levels may be the way to go.
DKNG – possible long on pullback to $60
DOCU – possible long if gets to $270
MRNA – trading range $375 to $450 (Strangle)
by Mahesh Kalbhor | Jul 20, 2021 | Weekly Update
What do you guys think ? is it worth buying bitocin at dip ?
