Topics covered:
1) 0:00 Announcements
2) 0:20 Market Commentary and Index Review (Nasdaq Composite, S&P 500, and Russell 2000)
3) 5:20 Stock Review – Energy: XLE (ETF), OIH (ETF), XOP (ETF), DVN, EOG, OXY, EQT, RRC
4) 8:35 Stock Review – Commodity Related: CF, MOS, ADM, ATI
5) 10:20 Stock Review – Big Pharma/Medical Products: LLY, BMY, AZN, MRK, LNTH, CUTR, PRCT
6) 12:25 Stock Review – Watch List/General Ideas/Commentary: AAPL, SWCH, PCRX, HRMY
7) 15:45 Conclusion/Summary

Market Summary:
The market saw a relief rally on Wednesday, as there were three positives that came out of the Fed meeting: 1) Fed Chair Powell said he would raise 50 basis points in the next two meetings. That doesn’t mean that they will ONLY do two more rate hikes and stop, but the market liked the clarity provided. 2) When asked if he would raise rates by 75 basis points at an upcoming meeting, Powell said the committee is not considering it at this time. The market definitely viewed this as a less hawkish tone. 3) In the Fed statement that’s released at 2PM EST, they removed the phrase that they would hike “expeditiously towards neutral.” It was a slight omission that the market also interpreted as positive. Please keep in mind that overall, the Fed didn’t signal less tightening, just a more measured path.

As I’ve been saying over the past month, I am not expecting any sustained upside until the Fed stops their current rate hiking cycle, pauses the hikes, or at least until the market has discounted all the hikes. The big question now is: Has the market factored in all the rate hikes for the rest of the year? Of course, no one knows the answer, but if it has, we need to see the following over the next few weeks: 1) A follow through day. 2) The major indexes to get back above their key moving averages. 3) Little distribution. 4) Most importantly, stocks to set up. Right now, what’s still keeping me defensive is that the majority of stocks that look good are coming from Energy, Commodity related, and Big Pharma. In other words, very few growth stocks are showing up on my screens.

Conclusion: Stay defensive and keep positions light until the market proves itself better and we see some of the criteria mentioned above happen. If this rally is for real, there will be plenty of time to make money. Another thing to consider is that maybe we stay in a range for a while. The market doesn’t have to go to new highs, nor does it have to fall apart. Either way, I prefer to keep things light until conditions improve and especially because I’m still expecting higher volatility over the near-term. I increased my investment levels from approximately 10% to 25% this week. If stocks begin to setup, I will slowly continue to scale back in. Also, keep in mind you can use Index or Sector ETFs as part of your strategy. Thank you and good luck for the remainder of the week.

Unusual Option Activity
5/4/22 Diamondback (FANG) with 400 December $135 puts sold to open for $24.50 to $24.40 mid-day
5/4/22 Oil Services ETF (OIH) buyer of 3000 June $310 calls $6.50 and 3000 June $315 calls for $5.50
5/4/22 Energy ETF (XLE) with 1800 Dec. $85 calls bought $5.58
5/4/22 Halliburton (HAL) seeing buyers of 1900 September $40 calls up to $3.45
5/4/22 SM Energy (SM) the June $40 calls opening 3,375X for $3.20 as the May $35 calls close and adjust higher and out
5/4/22 Amazon (AMZN) with 1000 June $2460 calls bought this morning for over $12M
5/4/22 Amazon (AMZN) also with 500 June 3rd (W) $2400/$2500 call spreads for $44.50
5/4/22 Netflix (NFLX) this afternoon with 1000 November $115 puts sold to open for $5.15
5/3/22 Nasdaq 100 ETF (QQQ) December $345/$275 bull risk reversal opens 14,500X at $4.11 debit
5/3/22 Amazon (AMZN) with 2000 June $2700 calls trading to open this morning near $67 average
5/3/22 Apple (AAPL) opening seller 15,000 June 10th (W) $160 puts $6.85 to $6.80
The trend in Apple of selling puts at bottom of range and selling calls at top end has continued for months
5/3/22 EQT Corp (EQT) with 1350 September $39 calls bought $7.60 to $7.70 to open
5/3/22 Devon Energy (DVN) with 1000 June $50 ITM calls opening early $12.55/$12.60
5/3/22 Salesforce (CRM) opening seller 1000 November $120 puts for $4.05
5/3/22 Valero (VLO) into strength seeing 600 January $130 calls sold to open today for $11.90 to $11.80
5/3/22 Valero (VLO) also with 2000 May 27th (W) $110 puts sold to open for $2.22
5/3/22 Chevron (CVX) seeing 1000 June 3rd (W) $160/$170 call spreads bought
5/3/22 Conoco (COP) with 2500 June $105/$97.5 bull risk reversals opening for $2.10 credit
5/3/22 Starbucks (SBUX) opening sale 1250 September $65 puts for $3.15
5/3/22 Albemarle (ALB) opening sale 700 January $120 puts for $6.10
5/2/22 Cloudflare (NET) with 600 January 2024 $80 puts bought for $24.40
5/2/22 Apple (AAPL) buyer of 6500 May $152.5 puts for $4.35
5/2/22 Apple (AAPL) also with 15,000 June 10th (W) $165 calls being sold to open $3.35 to $3.20
5/2/22 Apple (AAPL) also with 5,000 June 3rd 9W) $160 calls sold to open for $4.15
5/2/22 Nutrien (NTR) buyer of 2500 May $110 calls for $1.85
5/2/22 Merck (MRK) morning buyers 1500 May 13th (W) $88 calls near $1.75
5/2/22 Chevron (CVX) with 10,000 June $180 calls selling to open down to $1.40