As I mentioned in last weekend’s video, I came into the week lightly invested because some negative signs were showing up in the market. They included: selling beneath the surface in many growth leaders, the lack of setups over the past week, the high bullish sentiment, and the upcoming election uncertainty. The positives were: the major indexes holding up well and the Fed on our side. After Monday’s decline, I moved to 100% cash and discussed the reasons in Monday night’s webinar. Please keep in mind that 100% cash isn’t for everyone. If you are a longer-term investor, at least get off margin and cut losses on your weakest performing stocks. If you are a trader, raise cash and keep your positions light until we get more clarity.

After the market declined about -3% on Wednesday and the S&P 500 closed its 9/25 gap, I started to nibble on a few stocks (mentioned in this video) and I took a small position in the Nasdaq 100 ETF. I did this to “test the waters” and see if the market can stabilize around this first level of support. The next level I will be watching is the 3230 area on the S&P 500, which is breakeven for the year. No one knows if Wednesday’s gap down will lead to a larger decline or if this is one big shakeout ahead of the election. Either way, I suggest remaining defensive, keeping positions light, and raising some cash until the market proves itself. I am leaning towards this decline being a shakeout, but I’m by no means going to be a hero. I’m having a strong year and I don’t need to get aggressive with the major indexes below their 50-day moving averages. My current positions are light and I’ll wait to see if the market can prove itself and stabilize. If the selling continues, I will cut my light positions and go back to cash. Good luck for the remainder of the week and see you on Sunday for the next webinar.

Unusual Option Activity:
10/28/20 Skyworks (SWKS) buyer of 800 November $152.50 calls for $3.45 into Apple earnings tomorrow and their own report on 11-2
10/28/20 Lam Research (LRCX) nice reversal move today with 700 Nov. $320 puts sold to open midday
10/28/20 Horizon Pharma (HZNP) with the November $85/$95 call spread bought 5,000X for $1.70 into the highs of the day, earnings on 11-2
10/28/20 Adobe (ADBE) 200 July $400 puts sold to open for $33.10
10/282/0 DocuSign (DOCU) with 1000 June $185 puts sold to open today between $21.30 and $20.60
10/28/20 Farfetch (FTCH) with 500 April $25 puts sold to open today down to $4.05
10/28/20 Pinterest (PINS) with 500 Sept. 2021 $45 puts sold to open today from $10.40 to $10.10
10/28/20 Visa (V) offer sweep buys of 4000 September $200 calls to open $12.90 to $13
10/28/20 DraftKings (DKNG) strong in a weak tape with 1200 November $37.5 ITM calls bought $4.90 in offer sweeps
10/28/20 Apple (AAPL) into early weakness and ahead of earnings with 5000 Nov. 27th (W) $118 ITM puts being sold to open $8.20 to $8.10
10/28/20 MasterCard (MA) buyers of 3000 June $320 calls for $25 as the $340 adjust back with stock down 6% on results
10/27/20 Twitter (TWTR) March $65 calls active 2375X with aggressive $3.25 offer side buys earlier today
10/27/20 Zen-Desk (ZEN) IV perking up here with 1400 Nov. $115 calls bought $3.50 to $3.80, earnings 10-29
10/27/20 Cloudflare (NET) holding strong during recent market weakness with 1000 May $70 calls bought $6.80 offer in early action
10/27/20 Cloudflare (NET) also 1000 Dec. $50 puts sold to open for $3 today
10/27/20 Docusign (DOCU) 200 June $250 calls bought $29.65
10/27/20 Alibaba (BABA) 3000 Dec. $320 calls trade $17.70 that look to add to OI
10/27/20 Facebook (FB) with $8M in longer-dated call premium bought this morning, the Jan. 2023 $290 calls 400X, the $320 calls 400X, and the $330 calls 900X
10/26/20 Fastly (FSLY) opening sale 1600 Jan. 2022 $60 puts for $15.70 this afternoon
10/26/20 Zillow (Z) sale of 2000 Jan. 2022 $80 puts to open $15.65 in a stock replacement
10/26/20 Pinterest (PINS) with 1,725 May $55 calls bought today for $9.80 ahead of earnings this week
10/26/20 Amazon (AMZN) with 1000 January $3210 puts opening earlier today for over $25M
10/26/20 TelaDoc (TDOC) with 450 April $195 calls opening $41.28 as January $180 adjust out and up
10/26/20 Semiconductors ETF (SMH) with 15,000 February $200 puts sold to open deep ITM for $26.60 in a stock replacement
10/26/20 NVIDIA (NVDA) buyer 2500 June $700 calls $26.65 as March $720 calls from last week adjust
10/26/20 Snap (SNAP) 5000 Jan. 2023 $32 puts sell to open $6.45
10/26/20 Peloton (PTON) with 1,300 November $128 calls bought for $7.70 into earnings on 11-5, some concern over shipping delays for their Bike+ but overall demand seems strong

Topics covered:
1) 0:00 Announcements
2) 1:00 Market Commentary and Index Review (Nasdaq Composite and S&P 500)
3) 12:20 Watch List of stocks holding up well – Software: SNOW, OKTA, TWLO, BAND, PCTY, TEAM, FIVN, DOCU, BILL, ETSY (retail stock), FVRR, NET, ZS
4) 17:50 Watch List of stocks holding up well – General Ideas/Commentary: BABA, JD, HZNP, KOD, CCXI, NIO, FTCH, BIG
5) 20:45 No Setups, but these are my Current Holdings (all small positions) – QQQ, TSLA, ZM, SGEN, AMZN, ARCT
6) 24:40 Conclusion/Summary