One of the biggest positives in the market right now is that there’s very little distribution. This is important because the big institutions control the market and they are not showing any consistent signs of selling. As I mentioned in last weekend’s video, the Nasdaq Composite had 3 distribution days recently (July 13, 21 and 23), but did not see any additional distribution this week. In fact, we saw three accumulation days on Wednesday, Thursday, and Friday. The major indexes are all above their 10-week moving averages and the Fed is still providing an equity friendly environment. The price action of leading stocks firmed up this week (specifically in software and semiconductors) but it did weaken in many Biotech stocks. The main Biotech ETF (IBB) closed below its 10-week and I got rid of my exposure to that sector during the week. I think it’s best to keep any positions small in this sector until after the Presidential election, as lower drug prices will be mentioned frequently by both sides. Some negatives include the upcoming weak seasonality (August and September), and bullish readings in some sentiment surveys. As always, I will keep these in mind and be quick to get defensive if more consistent warning signs show up. Thank you and see you at 11AM EST on Sunday, August 2nd for the next Stock Screening Webinar.
Also, there was no Stock Market Update from Mike Webster last week because he was on vacation, but he posted one this week in a video format. Here’s the link: https://www.investors.com/market-trend/stock-market-update-raging-bull-setting-up/
Unusual Option Activity:
7/31/20 Zillow (Z) with 685 of next week’s $73 calls bought up to $2.52 into earnings
7/31/20 Inphi (IPHI) buyers earlier of 750 August $130 calls from $8.50 to $9.70 to open, comes ahead of 8-4 earnings and very strong history higher each of the last seven and 19 of the last 21
7/31/20 Chewy (CHWY) with 1000 October $70 calls bought today for $1.07 to $1.08 and the January $60 calls noted earlier up over 1000X as well
7/31/20 Teradyne (TER) with 1,100 January $90 calls bought up to $9.70 to open today
7/31/20 STAAR Surgical (STAA) with 1000 September $50 puts sold to open $1. STAA also 1000 August $55 puts sold to open
7/30/20 Facebook (FB) a few notable fresh trades into earnings; March $200 calls opening 1500X for $7M as the $140 adjust up, and 1000 June 2022 $300/$220 bull risk reversals open at $13.14 credit
7/30/20 Z-Scaler (ZS) opening sale 300 Feb $110 puts $12.10
7/30/20 Amazon (AMZN) with September $2900/$2860 bull put spread opening 1300X as lower strike bull put spread adjusts
7/30/20 Data-Dog (DDOG) seeing 1000 next week $100 calls active with buyers $3.40 to $3.50, earnings 8-6
7/30/20 Data-Dog (DDOG) also with 720 March 2021 $60 puts sold to open $4.40 to $4.30
7/30/20 DexCom (DXCM) with 150 March $420 puts sold to open $64.60
7/30/20 Zillow (Z) with 1,000 September $70 calls bought $4.90 to $4.95
7/27/20 Tesla (TSLA) 1500 November $2000 puts sold to open as September adjust, a $100M position (credit)
Topics covered:
1) 0:00 Announcements
2) 0:30 Market Commentary and Index Review
3) 9:35 Notes on Trading Ideas and Trading over Earnings
4) 15:40 Stock Review – Biotechs: IBB, VRTX, SGEN, BTAI, ADVM, ICAD, IDYA, ARCT
5) 20:10 Stock Review – Software: TWLO, DDOG, FSLY, CRWD, AYX, WIX, ZM, APPS, DT
6) 23:40 Stock Review – General Ideas/Commentary: CHGG, DXCM, SDGR, IPHI, NVDA, TER, NOW, DHI, XHB (ETF), ITB (ETF), Z, TSLA, CHWY
7) 31:25 Current Setups – AYX, CRWD, STAA, SPCE, TER, HLF
8) 35:40 Conclusion/Summary