From the end of September until October 12th, the market saw a very strong surge in many leading stocks. Since then, the market has been consolidating for the past 7 trading days and has pulled back to its 21-day moving average. As I mention in this video, the market moves very fast in both price and sentiment. We went from a negative tone in many sentiment measures to showing excess bullishness in less than 3 weeks. This recent pullback was probably needed to shakeout some of the bullishness and to allow many stocks to build handles to their newly formed bases. The decisions you make during these market surges should be based on your personality and your ability to watch the market. For example, if you trade full time, you can watch the market closely, you can make decisions, and you’re not easily rattled by volatility, then being nimble and taking profits is one option. If you work full time and you’re too nervous watching the market, then taking smaller positions and giving stocks room to run is another option. Either way, I will always do my best to provide you with strong entry points and it is up to each member to make these decisions based on your own situation and objectives.
From here, I would like to see if the market stabilizes around its 21-day and starts to bounce higher or heads lower down to its 50-day. While going through my screens tonight, I found very few setups. The majority of stocks acting well are the MegaCaps. It’s possible people are hiding in these stocks until after the election because they provide stability and the most reliable earnings. If you’re too nervous heading into the election, there’s nothing wrong with raising some cash or using smaller than normal positions until we get more clarity. I am currently 60-70% invested and I will take this day by day depending on the price action. If we continue to decline down to the 50-day, I will likely reduce some more ahead of the election. Being flexible and staying focused on price action will be key until we see where the market stabilizes. Good luck for the remainder of the week.
Unusual Option Activity:
10/21/20 S&P 500 ETF (SPY) large afternoon spread bought 12,500 March $354 calls $14.45 and sold 15,625 of the $375 calls $6.08.
10/21/20 S&P 500 ETF (SPY) also buyer of 14,000 Sep. 2021 $380 calls for $11.10, $15M, adjusting Jan. $355 calls.
10/21/20 Twilio (TWLO) with 1100 June 2022 $200 puts sold to open this afternoon near $29
10/21/20 JD.com (JD) 3000 June $60 puts sold to open $3.15
10/21/20 Apple (AAPL) the June 2022 $120/$190 call spread bought 2,500X5,000 for $9.30
10/21/20 Zillow (Z) with 400 February $90 puts sold to open $9.10
10/21/20 NASDAQ 100 ETF (QQQ) trade sold 5000 Dec. $242 puts to open $3.10
10/21/20 Amazon (AMZN) buyer of 1000 July $3200 calls $473.20 as 1500 of the February $3250 calls sell to open $314.25
10/21/20 Pinterest (PINS) with 5000 Dec. $50 calls opening $6.17 as the $42 calls adjust
10/21/20 Alibaba (BABA) with 2000 Nov. 13th (W) $335 calls opening near $6
10/21/20 Twitter (TWTR) with 5000 next week $52/$60 call spreads opening as the $48 calls adjust
10/21/20 Spotify (SPOT) breaking out of flag and seeing 700 Nov. 27th (W) $180 calls open at $89.71 as Oct. 23rd (W) adjust
10/21/20 Snowflake (SNOW) trading 1375 November $280 calls for around $2M with the range breakout this morning, though mixed flows in smaller lots
10/21/20 Horizon Therap (HZNP) 500 Nov $85 calls bought $2.90, Piper positive this morning
10/21/20 Invitae (NVTA) buyers opening 450 March $40 puts today from $6.10 to $6.20 into the recent strong run and follows almost 5000 June $40 calls closing in the last week
10/21/20 Invitae (NVTA) more June 2022 $40 calls closing
10/21/20 Netflix (NFLX) hovering near $500 after earnings and large trade sells 1300 Feb. $440 puts to buy the $550/$700 call spread, net credit of $0.65
10/21/20 Atlassian (TEAM) with 650 December $200/$180 bull put spreads opening for $6.45
10/20/20 Regeneron (REGN) with 100 January 2023 $820/$920 call spreads bought to open
10/20/20 Twitter (TWTR) afternoon sweep buys of 2000 November $49.50 calls $2.54 offer
10/20/20 Halozyme (HALO) buyer 500 January 2022 $32 calls for $5.40
10/20/20 Apple (AAPL) buyers active since midday for 6000 April $127.50 calls $9 to $9.45
10/20/20 Amazon (AMZN) with 1,250 February $3,250 calls bought for $341, more than $42.M
10/20/20 Invitae (NVTA) some June 2022 $40 calls taking profits today, 1500X, spot which has seen OI fall since 10/5 on profit taking
10/20/20 NVIDIA (NVDA) with 1000 March $540/$455 bull risk reversals opening
10/20/20 TelaDoc (TDOC) with 650 December $190 puts being sold to open $8
10/20/20 Advanced Micro (AMD) seeing December $95 calls active in smaller lots today with buyers near $3.50, over 5000X trading
10/20/20 Shopify (SHOP) IV fading today with 1000 November $950 puts sold to open from $30.50 to $29, shares right back to the 21-EMA today and just below new highs with earnings 10-29
10/20/20 Coupa Software (COUP) large opening buy 2000 January $260 calls $57.10
10/20/20 Crowd-Strike (CRWD) with 2,400 December $120 puts sold to open today between $4.60 and $4.30, strong name and shallow pullback to the 21-MA this week
10/20/20 Penn Gaming (PENN) working to day highs with 1850 next week $67.50 calls being bought $4 to $4.25 to open, earnings 10-29
10/20/20 Zillow (Z) unusual large spread bought 4,850 June 2021 $80 puts $9.60, sold 6,000 of the $60 puts $3.55 and bought 1,150 of the $80 calls at $28.80
10/20/20 Microsoft (MSFT) 20K Nov. 6th (W) $225/$235 call spreads closing
10/20/20 Netflix (NFLX) seeing an interesting strategy into earnings with June 2021 $550/$700 call ratio spreads trading 850X1700 to open this morning
10/20/20 Pinduoduo (PDD) with 555 Nov 27th (W) $105 ITM puts being sold to open $19 to $18.60
10/20/20 Virgin Galactic (SPCE) strong after hot call action yesterday morning and 3650 next week $25 calls busy this morning
10/19/20 NVIDIA (NVDA) into afternoon weakness a buy of 1500 December $650 calls $12.65, while March $720 calls sold to open 2000X at $17.60 to $17.45
10/19/20 Visa (V) buyer 1500 Nov. 27th (W) $200 calls $6.46 into afternoon weakness
10/19/20 Taiwan Semi (TSM) late day opening sale of 1500 January $85 puts $5.45
10/19/20 Amazon (AMZN) buyer of 1,000 December $3400 calls for $178 to open
10/19/20 Snap (SNAP) April $33 call buys are up to 3800X today into earnings 10-20, over $1.1M
10/19/20 Snap (SNAP) also 2000 June $34 calls bought $3.50 to $3.60
10/19/20 Zoom (ZM) with 1150 June 2021 $750 calls opening $78.50 to $79.40 this afternoon
10/19/20 Sailpoint Tech (SAIL) with 700 December $45 calls bought for $5.20 today, consolidating the recent gap higher and MSCO bullish on 10/1 citing a growing TAM which is about 4X current spending levels
10/19/20 S&P 500 ETF (SPY) buyer 1000 April $347 calls to open $21.46, above offer
10/19/20 Nasdaq 100 ETF (QQQ) 1000 March $279 puts sold to open $19.87
10/19/20 Alibaba (BABA) the December $305/$375 call spread bought 1500X3000 for $16.80
10/19/20 Taiwan Semi (TSM) seeing trades in that structure as well with Jan. 2022 $90/$60 bull put spreads, the $100 calls sold, and Jan. 2023 $60 calls bought 1000X
10/19/20 NVIDIA (NVDA) some large trades this morning, the January 2022 $800 calls sold 1050X to open and the $560/$450 bull put spreads opening, while 1000 January 2023 $480 calls open for $19M, similar to the DXCM spread earlier
10/19/20 Sea Limited (SE) Jan $120 puts active with sellers 2400X
10/19/20 Sea Limited (SE) 400 Dec $150 puts sold to open $9.30
10/19/20 DraftKings (DKNG) retesting a key September breakout and looking for a reversal today, the May $60 calls being bought 1000X at $6.90
10/19/20 Microsoft (MSFT) with 20,000 November 6th (W) $225/$235 call spreads bought for $2.78, adjusting some Oct. 30th (W) spreads out in front of 10-27 earnings
10/19/20 Spotify (SPOT) with 200 April $220 puts sold to open $16.75
SPOT also with 250 April $240 puts sold to open now
10/19/20 Google (GOOGL) with 1000 Nov. 27th (W) $1500/$1600 call spreads opening as some Oct. 23rd (W) positions adjust
10/19/20 Fastly (FSLY) with 1,100 January $105 calls bought for $7.42 to open today and last week’s move back to multi-month support
10/19/20 Zillow (Z) the November 6th (W) $99/$108 call spread being bought 500X1,000 at a small debit into earnings which should be around 11-5
10/19/20 Lululemon (LULU) with 425 November 6th (W) $352.5 calls bought $10.35 to $11.05
10/19/20 Twitter (TWTR) with 700 January $49 calls bought into the early lows, $3.45 to $3.50, pulled back to the 21-MA late last week
10/19/20 Advanced Micro (AMD) opening sale 2500 Dec. $72.5 puts $2.93
10/19/20 Facebook (FB) Nov. 27th (W) calls active with the $270/$280 call ratio spreads opening 2000X4000 and also the $260 calls with 2000X bought to open
10/19/20 NASDAQ (QQQ) with March $289/$321 call spreads bought 1400X
10/19/20 Inphi (IPHI) the November $140 calls bought 600X from $3.50 to $3.75 ahead of 10-29 earnings, big weekly breakout potential and strong history higher seven of the last eight
10/19/20 DexCom (DXCM) working out of that base and January 2022 $420/$340 bull put spreads open 850X with the $540 calls bought for over $4M while 850 Jan. 2023 $300 ITM calls open as well for near $15M
10/19/20 Square (SQ) with 1,750 June $62.50 ITM calls opening for $126.45, adjusting the December $62.50 calls out
10/19/20 Taiwan Semi (TSM) opening buys 1000 Jan. 2022 $135 calls $5.15
10/19/20 Penn Gaming (PENN) with 1725 November 6th (W) $50 puts sold to open $0.52 into early weakness
10/19/20 Virgin Galactic (SPCE) calls very hot early with 8500 next week $24 calls being bought and 2850 Nov. 6th (W) $23 calls
Topics covered:
1) 0:00 Announcements
2) 0:40 Market Commentary and Index Review (Nasdaq Composite and S&P 500)
3) 13:00 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)
4) 20:15 Stock Review – Software: FSLY, DT, SE, SHOP
5) 22:30 General Ideas/Commentary: PYPL, JD, CHGG, CCXI
6) 25:20 Current Setups – ADBE, MSFT, NVDA
7) 26:45 Conclusion/Summary