REASON TO BELIEVE...
News just got greater on Friday of because instead of CNN reporting it... news just came directly from a Big Topshot....
"We have "REASON TO BELIEVE" that it is going to be imminent in the next few days.... "HE" has decided to strike that little neighbour with all its might...
OKAY.... again something that is going to spook the markets next week, whether it is going to happen or not, everybody will anxiously wait.
Let's not hope that the market will rebounce anytime soon but play within what the price actions shows us. So far downward pressure with lots of resistance. Stocks has been falling like flies... Great if you are doing some value buys or shorting the market and not so great if you are trading long market.
If it "STRIKES" expect more volatility and if it does not, we are already closing mid March when the rate hike will be implemented. Regardless if it is 50 bps or 100 bps, the market is not going to like it anyway and the pressure is still down till then.
So what is your "REASON TO BELIEVE" something? Is it something because you are convicted based on strong data and experience or it it because of someone's influence. Whatever it is, if you are convicted in it and the "Believe" will bring you forward, then just have faith and work on it as one day, your "Believe" will surely come true...
SPX
SPX closed 4348 last Friday, down 31 points for the day and for the week down by 70 points. Not too bad but from the high of the week, that's a 141 points down. Again, 3 consecutive weeks, 3 days up, 2 days down. Sell the rally's the game. The direction to go is still down for time being as it seems.
Next week, watch out that we may even see a double bottom to the previous low of around 4285 level. If it breaches, expect lower to come at 4200 then.
NDX
Things has not been so nice to NDX counters lately. More counters banging their head down. Whether you are giving good earnings or bad earnings, the direction is still downward pressure. Upstart (UPST) announced good earnings, popped 30% and gave up half of it in just 2 days. ROKU gave lower than expected revenue and got shot down close to 30% before making some recoveries.
Like I said earlier, 20-30% seems to be the standard now to punish any of the former NASDAQ glory babies. It is easier to get it down 20-30% than to push it up 20 to 30%. So lets not waste energy talking about how good and great the future will be and at the slightest bad news or lower earnings expectation coming from any of these guys... there will only be one way...which is down down down.
TRADE WATCHLIST - SBUX...
Market has put on a great big chain on SBUX. Pulling it lower. If market continues its tantrum, SBUX will likely go down to next level of 90. No long set-ups for time being.
INVESTMENT BUY IN - MSFT...
Trading at 288 now and likely to go down to 280 by next week. I'll put an eye at 260 level now as I have already loaded some at 300 to compensate a bit.
INVESTMENT BUY IN - ADBE...
I think the market makers are having a fun time killing all the longs. ADBE have gone down 37% from its high and closing 442 last Friday. It is really testing our patience as every buy in level, it gives us another opportunity, a better one. We will add more at 400 level if it reaches this.
BEARISH POSITION
In a situation where market is having high volatility and also pressure downward, we can take such opportunities to generate premiums through BEAR CALL SPREADS. This is a defined risk trade where we are neutral to slight bearish. Best executed during high volatility as we generate higher premiums. IV above 40 or IV Rank at least 20 and above.
Involves, selling one call (around Delta 20) and buying another call at a higher strike, spread width between $3-$5 as it takes less buying power. DTE around 45 days at best. Exit at 50% profit target. Risk to reward around 4:1 with probability of profit between 70-80%.
Chart patterns we can use as entry points are stocks which is going sideways with range sitting at top of sideway patterns, or stocks which forms double tops with overbought signals on stochastics.
Example below.
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