Tickers discussed: SPY QQQ IWM MGM SBUX HLT WMT DIS Key option order flows Strategy & Tactics
The Weekend Profit Navigator provides the stock market analysis for the week. Key levels and trading locations for the indexes are provided, along with trading plans and timely commentary to keep you on the right side of the trade.
Trader’s Couch
Quieting the mind along with our base instincts / re-activities are key prerequisites to advance our trading. If it’s good enough for Ray Dalio, it’s probably good enough for you and me. I have found it to immensely helpful. Don’t view it as some daunting or mystical thing…it is neither. Start slow. Play with it. Let it grow organically and be open to possibilities. I will be willing to bet if you give it a fair shot, you’ll never look back. Along with the references Dalio provides, you can find out more at TM.org. Also if you’re into “apps” Headspace.com provides an easy way to get started with something positive.
Earnings
Greed Meter grinds higher
Put Hate.
Contrarian bearish but to no effect ( yet )
Concentration Risk continues to climb.
VIX rising with SPX
When they pull the rug, this factoid will be rolled out with the comment “You should have seen it coming dummy”
About those Yellow Flags
I’ve adopted a mentality of trading price while being fully cognizant of the yellow flags. In practical terms, I am keeping overall exposure at a comfortable level and peeling off profits as the market gives them. I am fully prepared for a potential rug pull but hiding under the desk sucking your thumb waiting for “the big one” or worse, shooting against all time highs has been a losing trade. If anything, I have not been aggressive enough. Listen, these yellow flags will play out at some point, but we will see it in price when they do. If we trade price and keep our overall risk in line, we’ll be able to participate in the upside and not be mortally wounded if / when an overnight whoosh event hits us.
Institutions are supporting these bullish moves
$MGM – MGM Casino
MGM, despite announcing layoff’s of 19,000, advanced to take out the prior high. Started seeing a pickup in option activity across the gaming space. I think traders can shoot long against $23 in the name.
Gaming Sector Institutional Flows
Institutional order flow really picked up in the back half of the week across the sector. $WYNN saw some significant activity as shown below.
$SBUX – Starbuck’s
Starbucks is breaking out and appears to be heading to the high side of its recent value range. Looks like the low $90’s are in the cross hairs. Institutions are betting on more upside. Traders can shoot long against $83
Casual Dining on Fire
In addition to the strong order flow into $SBUX, notice the unusual orders into $CBRL where one trader was buying March 190 calls $60 OTM. Take note of that trade.
Aside from these 2 call outs, thumb through the casual dining stocks. EAT / MCD / DIN / CAKE / SHAK / DIN / TXRH / DNKN etc. All rapidly advancing
$DIS – Disney
After consolidating over the past couple of weeks, Disney moved into it’s unfilled gap that is open to around $138. Assuming it can pop through, price seems destined to move toward the mid $140’s and possibly to the prior highs at $150. As you can see from the order flow, institutions were carpet bombing calls from the opening bell to the closing bell Friday looking out to September, October and even 2021 expiration for more upside. THis type of flow inspires more confidence than when you see primarily orders targeting only a week or two out.
$HLT – Hilton Hotels
Hotels is another consumer discretionary industry group perking up. If you look across the space to $MAR $WH and other smaller players the charts are looking constructive. Shown below is the biggest trade on $HLT on Friday. One trader bout the Jan 2021 90 / 95 “Call stupid” Buying both legs of the spread looking for an extended run into the new year.
$NFLX – Netflix
Price has been consolidating for 2 days following the unreal explosive move on Wednesday that saw a fast $45-$50 move higher. Now on Friday there were 2 block trades that caught my eye that were at the top of the board. Both were at the money 530 calls. One in early October, the other for the December expiration. Collectively $14Million in premium bought on the 2 trades. 2 big votes of confidence there.
$WMT – Walmart
Is this just about Tik Toc sweepstakes or something more? Friday saw Walmart having 6x normal call volume. Much may be attributed to their interest in Tik Toc, but what caught my eye were the trades where some decent sized money was looking out to January and even June 2021 for further upside. Tough to buy it here at north of $140 but any pull back between $136 – $132 might be worth a shot.
FAAMG Order Flows – Trend Shift
There has been a decided shift in the order flows in the FAAMG names. A couple of weeks ago the call buying was rampant and bordering on the insane. Now this week we’ve seen a shift.
- FB / AMZN / AAPL Generally bearish flows
- GOOGL – Neutral Flows
- MSFT – Remains bullish and possibly a result of the Tik Toc effect.
Checking in on the Indexes
SPY Weekly
The recent breakout gives bulls a beautiful line to shoot against at 3400. As long as price stays above $3400, any remaining bears pose nothing more than an occasional annoyance. If the bears, however were to push price below 3400 and close it there , then the bulls need to take careful notice. It would make the recent move look like a fake breakout and thus would put bears in short term control with a chance to do some damage. Bulls need to also keep in mind that a back test of $3400 would be a common technical move. As long as 3400 holds it would be a simple backtest, nothing more. If it holds, it would be a great place to BUY the dip.
SPY Daily
Bulls need to be aware that channel resistance is just overhead in the $352-$355 area. A move toward the bottom of the channel shouldn’t be a shock if it occurs. If it does, there should be dipsters waiting in the $340-345 range
QQQ Daily
The doji candle on Friday wasn’t very inspiring. Now that price is above the mid-point of the channel, its a good reference point along with the 8ema in pink. If price were to lose the mid-channel line and the 8ema, a 20ema test at the bottom of the channel would be favored in the $285 area. As long as price is in the channel, the bulls are in full control. Any break below the channel and bulls need to pay attention. You can see how far price is extended above the 50ema and 200ema. A simple 50ema test at $265 would probably have a few contemplating jumping from windows but technically speaking the uptrend would still be fully intact. Time frame is everything.
$IWM Daily
Although IWM has been a snooze-fest over the past few weeks, Traders should pay attention. If the “great rotation” to value and cyclicals ever truly takes hold, you should see it in IWM which is loaded with banks and other cyclical names. If / When price ever takes out $160 it should be bought. A break below $155 however should be sold as it would favor a $5 move lower to $150. Alarm $160 and $155. While the $5 measured move in either direction won’t make you rich, its a trade worth taking in either direction.
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