I received some emails from members that are confused by the market’s recent price action and they asked me to help provide some clarity in this weekend’s video. First, it’s ok to be a little confused right now. We’re in a correction, there’s increased volatility, and the market is giving us mixed signals. In other words, the market is not always going to give us a clear picture. That’s why I’ve been saying over the past few weeks to reduce your exposure, get a little defensive, and wait patiently for a clearer picture.

My bigger picture view is that this is a normal 8-12% correction within an uptrend. Many members have asked me what makes me so sure? The direct answer is “Of course no one knows.” I’m just trying to pass along my best professional opinion based on experience and my interpretation of the price action. I am basing my reasoning on 3 main factors: 1) The price action of stocks 2) The Fed and 3) Sentiment. (I discuss all these in the Market Commentary section of this video).

The next question is “If you’re so constructive on this market, then why have you been encouraging defense the past few weeks?” This is a great question and I’ve been doing so for 2 reasons: 1) My analysis could be wrong and 2) I was expecting a pullback and higher volatility towards the end of the month for the reasons I mentioned in recent videos: End of the quarter portfolio rebalancing, mutual fund positioning, the Jewish holidays, normal profit taking, the news cycle, shaking out the excess bullishness from late August, and more IPOs (supply) coming to market. Reducing exposure helps because if I’m wrong and we head lower, at least you won’t get hit as bad and if I’m right and we stabilize here, there will be plenty of opportunities if we get signs of a SUSTAINED uptrend over the next few weeks or months.

Do I think we’re out of the woods right now? No. I still expect some volatility over the near-term but I do not expect any major downside from here. I don’t see this as an October 2018 or a March 2020 scenario. I think the dips will be shallow and bought as we head into earnings season which starts in approximately two weeks. I increased my exposure towards the end of the week mainly due to the strong price action of stocks. If you have any questions, you can ask me during the next webinar on Monday, September 28th at 7PM EST. Enjoy the rest of your weekend!

Unusual Option Activity:
9/25/20 Adobe Systems (ADBE) size buyer of the January $420 ITM calls 5100X for $77.91, the October $420 calls bought on 7/10 closing
9/25/20 Fastly (FSLY) sellers of the January 2022 $75 puts for $22.10 today 400X, over $900k
9/25/20 Advanced Micro (AMD) buyers of the October $74 calls for $4.80 to $5.40 today
9/25/20 Microsoft (MSFT) buyer 2500 February $215/$245 call spreads
9/25/20 Zillow (Z) the February $105/$130 call spread being bought 1,150X2,300 for $0.60
9/25/20 Redfin (RDFN) buyers of the October $47 calls for $3.50 to $3.70, over 1200X
9/24/20 Twitter (TWTR) ITM November $37 calls opened 2000X with half at $8.05 and half at $8.15 in two large lot buys
9/24/20 Visa (V) with 1100 September 2021 $125 puts being sold to open $3.80 to $3.60
9/24/20 Amazon (AMZN) July 2021 $4300 calls seeing 690X trade today with buyers $116 to $124, over $8M
9/24/20 Alibaba (BABA) opening seller 500 January 2022 $300 ITM puts for $58.40
9/24/20 Spotify (SPOT) aggressive buyer 1000 November $280 OTM calls $7.10 offer
9/24/20 Spotify (SPOT) also seeing higher $ buyers in November $250 and $260 calls here
9/24/20 Zscaler (ZS) with 425 May $120 puts sold to open between $15.95 and $15.60, similar to sales at the $110 and $100 strikes lately
9/24/20 Taiwan Semi (TSM) Oct $84 calls being bought up to 2000X
9/24/20 NASDAQ 100 ETF (QQQ) large trade sold 5000 December $238 puts to open for $8.40, also 1500 Jan. 2023 $350 max-strike calls bought $15.50 to $16.50
9/24/20 Chegg (CHGG) November $70 calls being bought $6.60 to $6.70 today, over 450 trading
9/24/20 Natera (NTRA) sellers of 400 October $60 puts to open for $1.65
9/24/20 Pinterest (PINS) the September 2021 $47 calls active for a second straight day at $7.80 over 1500X
9/24/20 Horizon Therap (HZNP) with 1000 October $75 puts selling to open $3.30 to $3.50 range
9/24/20 Invitae (NVTA) highs of the day with 850 March $45 calls bought up to $8.50, relative strength name since their deal for Archer
9/24/20 Invitae (NVTA) March calls trading over 2400X today
9/24/20 Biotech ETF (XBI) with 2000 Oct. 30th (W) $112/$105 bull risk reversals opening
9/24/20 NVIDIA (NVDA) strong morning and 1435 Oct. 30th (W) $525 calls opening, look to be adjusting $550 calls, captures an October Analyst Day
9/23/20 Chewy (CHWY) IV higher midday with 3900 Nov. $75 calls bought $1.13 to $1.36
9/23/20 Pinterest (PINS) opening seller 1500 Sep. 2021 $35 puts for $6.95, also seeing buyers of 1200 of the Sep. 2021 $50 calls up to $8.05

Topics covered:
1) 0:00 Announcements
2) 0:35 Market Commentary
3) 10:10 Index Review (Nasdaq Composite, S&P 500, Russell 2000)
4) 13:40 NEW FOCUS LIST – AMZN, MSFT, ADBE, AAPL, CRM, QQQ (ETF), CRWD, ZS, OKTA, VEEV, NOW, TSLA, Z, MA, SQ, NVDA, ZM, SGEN, TXG, GH, NVTA, ADPT, ARKG (ETF)
5) 30:25 Stock Review – Software: APPS, BAND, DDOG, FVRR, PLAN, ESTC, SAIL, ZEN
6) 34:00 General Ideas/Commentary: EXPI, NTRA, TWST, SE, KTOS, CRNC, DPZ, PKI, MRVL, LOW, TGT, MTH, TOL, XHB (ETF), ITB (ETF), GOGO, NIO
7) 42:40 Current Setups – DDOG, MRVL, SQ, PKI, EXPI (half position)
8) 44:00 Conclusion/Summary