I wanted to reiterate a few words we discussed last night in regards to the market. Last night, we touched on the fact that the Nasdaq/Russell had broken their relative strength relationship. For weeks, they’ve been holding up better than the S&P/Dow. This is why I took TZA yesterday, is due to the fact that yesterday’s weakness was a sign that the bears were going to raid the relative strength trade coming into today.
At the beginning of the month, I warned that the social media/china internet/solar space would eventually cool off and underperform the market. When the relative strength is dismantled, investors start to panic. Two instruments we touched on yesterday were the McClellan and VIX; both said that we haven’t reached panic yet….which we are seeing today.
Also to that point, the Dow and S&P are now becoming the relative strength trade. Investors will seek out quality when attempting to start nibbling.
We are close to a flush, keep your eyes out for sound names that are holding up better than “the market.”
OA
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GOGO?
yep
potentially GMCR, though its simply been consolidating after a move down…so maybe there are better charts out there
PWRD & CRUS are looking ok so I’m practicing patience with them but got shaken out of YGE (in at 5.60 out at 8.23).
AAPL
?
MCP
APP lol
In quality category but not as stodgy as GE, would you consider sbux, wfm, veco? They seem to be getting to attractive levels esp WFM and VECO.
SBUX and WFM holding very well
WWW or if you like channel trades…CVX has manageable entry point
DNKN
Coach, if someone had no hedge in place today,like your TZA, is it chasing or too late to hedge our long calls portfolio?
Too late. Wait for the dip buy
I needed to hear that as i was about to buy VXX calls at exactly the wrong moment…holding all calls for now
NEVER. EVER. BUY VXX CALLS
NEVER. EVER BUY VXX CALLS
GMCR and GME. still holding YGE and granpa stocks.
WOW!!! $YY. simply incredible. never seen something like this
You must be new to trade. I’ve seen those a lots. I should say “we”.
yeh. during the financial crisis meltdown.
food sector: BWLD, though I’d be patient just a bit more with it…and I like CMG, but its one of those that had been relatively strong then got hit today…earnings coming up
SCTY. Nice bounce of the lows
OA, I know you hate trading options in stocks like WMT but it is a thing of beauty today in terms of stability. Would you ever make an exception of buying ITM or just out of money calls in this? I bring this because the call value for Oct options change significantly overnight defying the stodgy status of the underlying stock. Tempted to take a small position for couple of days to exploit the apparent sector rotation here.
*changed
Wait for multiple sessions of rotation to be sure. The natural response to days like this is to flock to safety. This is why XLU, XLP, XLV are holding up well. Could be temporary.
Totally agree on “multiple sessions” point. WMT seemed to have broken from a downward channel today, and so that was the additional motivator for me.
If you have the ability to, you may want to sell cash secured puts instead with VIX so high and movement unlikely to really break significantly in the direction you want.
Hey OA. I picked the top in TSLA. I got some shares short and even some puts. Problem is that I wussed out of the options way too early. I’d assume that means I had too much money in the option??
Sorry to butt in. You actually did the right thing by “wussing” out earlier IMHO. TSLA has a short float of 26%. This means your puts had a good chance of becoming worthless had there been any whipsaw action upwards, which is common for such high short float stocks. As a rule of thumb, I never short any stock with float of more than 15%.
see the rotation into utilities XLU
I mentioned it already, but WWW has held well today and into this afternoon. I don’t know anything about it other than the chart, earnings today, and an upgrade. Yes, I entered a position within the last 15 min.
Jeff,
What about doing a Oct 11 495 /Oct 18 450 call diagnol for 3.80. I did 5 contract whats u r thought on more.
Premiums are high. Good way to offset the costs of calls.
sorry I meant – Oct 11 495 /Oct 18 500 call diagnol for 3.80.
I feel like I’m getting to that aversion stage, just want to throw the towel in and never look back lol
Soe I am guessing this isn’t quite the flush? Is the flush a little faster? Or would this be part of the flush you were talking about? Or maybe a flush gap down tomorrow morning?
Pardon me, I forgot to flush.
OA GME looks to have some great RS today.Would you take a look this evening?
Err…I own it. We can look at it.
I know. me too.i was looking at Nov. exp.
What did you want to look at?
GME is looking absolutely sexy! OA, would you add it here if it was a new position?
nice to see LITB coming off the lows.
LOTTO buys – COST and FDO pre-earnings play. These two have better chance of growing in weak economy and hopefully the last quarter reflected some of it already.
It appears the Solars will not die easily.
OA, any ray of hope with AAPL weeklies?
I am optimistic, but occasionally early.
Bot WLT Nov $16
FLUUUUSHHHH!!!
I wish I wasn’t such a cheap ass piker so I could comment on the Fly’s blog.
There’s a lot of toilet talking going on over there, and I’m missing the fun.
Flush it!
damn
Hi OA, if you think “rotation” happening, no more solar run? or you still think they will hit your target, YGE 10 ? Thanks.
Who knows? I would watch and see.
xone oddly strong
While I will grab some GS when we reach oversold, I have to say that I still really like MCP, CLNT and WLT here. Especially CLNT.
I like GS here. I picked up some Oct 160’s today. I’m curious to see what sector(s) all the money from internet and china stocks flow into. With earnings season coming up for the financials and all the focus on the debt crisis and government shutdown, it just feels like the financials would be the last place people would put money (which is why I think it may happen).
Or maybe I’m just crazy…
To further back my thesis…
$BKX wedge: http://tinypic.com/r/smaver/5
$BKX trend: http://tinypic.com/r/sdgzv7/5
LITB …whats the plan?
Can I follow your lead on this one?
To me, if it can’t hold $11, then I’m out …seems like it would test the lows again. What say you?
I had the same plan. Using the range.
Target for exit – high 12’s or low 13’s ?
Eagerly awaiting the OS PPT stats to grab more of FSLR
OA, I have already exited YGE but I’ve been curious as to what your exit strategy was with this one. I understand that you would be looking for a break of the previous days low but are you looking for that on a closing basis?
kdog, fyi I bot some YGE NOV $8 calls right here…my understanding is that OA will hold this with $10 target w/o a stop
My own personal plan is anything over 9 ish on a good market day. The way this thing climbs (50 cents or so a day when it rises), I don’t want to take it down to the wire next Friday. Assuming a close near 8 today, that gives it 5 trading days to do what it’s gonna do. I still believe it will hit 10, but am mindful that we are not in a predictable market at the moment.
Oops – just noticed you said NOV calls. Shit, you’re sitting pretty. Set a target of 10.50 and enjoy the ride. Obviously this changes if it takes out new lows, but so far this thing is just chugging along doing its own thing.
right Ian, I just bot this morning NOV, so I am in…i traded out of OCT calls last week..
kdog, I stand corrected by OA newest blog, he is out of YGE, since i just got in a v low basis, I’m holding for now
OA, If we get Mclellan oversold, would it be a good plan to short the vix?
How would you “short the VIX?” Long puts at these prices?
Yeah. Long puts but i assume the premiums are pretty high..
That is a very volatile instrument, with HV roughly @ 80. Then to buy into fast markets, you’ve got IV +100. That’s a priced trade, which puts out very little. Perhaps short VXX if you want to pull this off.
Ok thanks
Since it’s too early for $HAS and the weather here precludes $GLF, I was spending the am hours $FAI (*&*^ around on Internet)..
Did y’all know that for only $67, I can have any woman I want and SHE will actually pursue ME ?
Where has this been all these years ?
Certainly if this is going to happen, I better the heck take advantage of the $99 offer to make my you know what bigger.
While bringing my morning coffee, my wife seems to be eyeballing my laptop with thoughts of malice…
I’m off to hide my hammers and crowbar.
More Later.
LOL