In last weekend’s video, I discussed some of the mixed signals in the market. The positives: The Fed is on our side and many stocks were still acting well. The negatives: Distribution days were increasing, the major indexes were slightly below their 10-week moving averages, and many leaders were also slightly below their support levels. Whenever there are mixed signals, I will always lean towards a defensive posture and do my best to protect you. This means raising some cash, using lighter than normal position sizes, and making sure to stick to your sell discipline if any stocks break down. I also mentioned that the next week or two could see added volatility for the following reasons: End of the quarter portfolio rebalancing, mutual fund positioning, normal profit taking, the Jewish holidays, the news cycle, and more IPOs (supply) coming to market.

Let’s fast forward to the price action this week. Monday gapped down but many stocks were still acting well. The Nasdaq Composite rallied back to even and avoided a distribution day. Tuesday was another solid day for many stocks but it occurred on light volume. This is important because we want to see a stronger commitment from the big institutions. Wednesday started of well but the Nasdaq Composite met resistance at its 50-day and reversed to close on its lows. Wednesday’s distribution day was the 6th for the Nasdaq Composite so far this month. When stocks were acting well early in the week, I started to increase my investment levels but Wednesday’s reversal led me to reduce back to 30-35% invested for my clients.

From here, I can’t stress enough to be defensive until we see signs of the big institutions coming back into the market. This means raise some cash and use lighter than normal positions until we get a “follow through” type day. As I mentioned, when the signals are mixed, I will lean towards being defensive. But as more distribution days pile up and the major indexes start to slip further away from their 50-day moving averages, the signals become clearer to get even more defensive. I’m not overly bearish on the market and I am not expecting a major decline from here, but I definitely want to remain defensive until a follow through day gives us the potential for a new sustained uptrend. Until then, the market is likely to chop around and that can really hurt people who over-trade and who don’t reduce position size. Good luck for the remainder of the week and stay defensive!

Unusual Option Activity:
9/23/20 Apple (AAPL) with 2,000 January 2022 $102.50 puts sold to open for $15.50
9/23/20 Horizon Therapeutics (HZNP) with 500 December $95 calls bought up to $4.70, name that still has 3000 February $80 calls in open interest
9/23/20 Adobe (ADBE) opening sale 300 February $475 puts for $48.10
9/23/20 Zillow (Z) with 350 Feb $115 calls bought between $10.50 to $10.75
9/23/20 Facebook (FB) large trade opened 3000 June 2021 $320/$220 bull put spreads for a credit of $59
9/23/20 Taiwan Semi (TSM) 1350 Dec $65 puts sold to open $1.35
9/23/20 Twitter (TWTR) the January 2022 $42 calls being bought 1000X for $12 to $13
9/23/20 Okta (OKTA) with 650 October $230 calls bought $4.35 to open, now up over 1300X
9/23/20 Docusign (DOCU) Oct $230 calls active 2300X with the technical breakout above 21 MA
9/23/20 Bioxcel (BTAI) buyer of 1500 March $60 calls $9.50 sold 1500 February $70 calls $4.10
9/23/20 Pinterest (PINS) the December $42 calls being bought 7000X for $6.40 as the $35 calls close and roll up into strength
9/23/20 Snap (SNAP) early buyers of 2000 November $27 calls near $2 and now approaching 23,500 in the opening hour.
9/23/20 Snap (SNAP) also seeing over 20,000 January $27 calls trade this morning
9/23/20 MasterCard (MA) with 1800 November $360 calls opening $6.74, adjusting a trade from 8/6 out of October $345 calls
9/23/20 Snowflake (SNOW) with 1,000 October $300 calls being bought this morning between $7.00 to $8.60
9/22/20 DataDog (DDOG) with 1000 Oct. 2nd (W) $95 calls opening $1.95 to $2.15 in late day action
9/22/20 Facebook (FB) December $260 calls active with buyers $20 to $21 this afternoon and over 3000X trading
9/22/20 Nvidia (NVDA) Oct 2nd (W) $510/$530 call spreads trading 1500X
9/22/20 Zillow (ZG) buyers this afternoon of 750 October $105 calls for $3.60 into new highs
9/22/20 Z-Scaler (ZS) with 650 Oct. 30th (W) $135 calls opening near $10.35
9/22/20 Z-Scaler (ZS) 400 May $100 puts sold to open near $8
9/22/20 Digital Turbine (APPS) with 1000 October $30 puts sold to open for $2.10
9/22/20 Beyond Meat (BYND) the September 2021 $170/$230 call spread being bought 200X today for $14.45
9/22/20 Taiwan Semi (TSM) large buyer 3000 Dec. $85 calls $4.15 to $4.46
9/22/20 Dynatrace (DT) with 640 November $40 puts sold to open $3.60 to $3.50
9/22/20 Pinterest (PINS) strong near highs and 2000 Oct. $44 calls bought up to $1.04
9/22/20 Penn (PENN) with call buyers active, the Oct. $79 trading 4000X
9/22/20 Spotify (SPOT) with 2000 October $240 calls active, mostly spread with $260 calls similar to recent upside call spreads opened
9/22/20 Facebook (FB) buyer 100 Jan 2023 $260 calls for $57
9/21/20 Invitae (NVTA) 321 Jan 2021 35.0 Calls $10.10
9/21/20 Zoom (ZM) midday buyers of 600 June 2021 $560 calls $68 to $72
9/21/20 Crowd-Strike (CRWD) on the rise with 2000 Oct. $140 calls actively bought
9/21/20 Crowd-Strike (CRWD) staying strong near highs, also seeing the Oct. 30th (W) $135 calls with opening action 675X this afternoon
9/21/20 Adobe (ADBE) with 1000 Oct. 2nd (W) $430 puts sold to open down to $4.37
9/21/20 Apple (AAPL) opening sale 1500 Jan. 2023 $75 puts for $9.05 to $9.10
9/21/20 Peloton (PTON) Oct $75 puts 5000X active w/ opening sales
9/21/20 Apple (AAPL) dip buyers this morning targeted Oct. 9th (W) $105 calls where 5000 are trading for around $3M premium
9/21/20 Apple (AAPL) also seeing sellers 2500 Jan. 2022 $90 puts
9/21/20 Advanced Micro (AMD) buyer 2600 October $83 calls $2.22 to 2.26

Topics covered:
1) 0:00 Announcements
2) 0:35 Market Commentary and Index Review (Nasdaq Composite, S&P 500, Russell 2000)
3) 14:25 Stock Review – Mega Caps: AMZN, MSFT, ADBE, TSLA, GOOGL, FB, AAPL, NFLX, CRM
4) 19:00 Stock Review – Software: CRWD, FSLY, APPS, ZS, FVRR, ZM, NOW, ZEN
5) 22:00 Stock Review – General Ideas/Commentary: ALB, HZNP, NVTA, GH, TXG, PINS, PENN, DKNG, MTH, STMP, TWST, Z
6) 28:00 No Current Setups and Conclusion/Summary