Overall a pretty slow week for me.. failed breakouts, sloppy price action, low implied volatility, upcoming earnings in the way, etc. My best trade was getting long GMCR on Monday morning. Until earnings can get out of the way its just going to be selling premium in the weekly cycles before the announcement, short term (few days) positions, and ETFs. Also as I am still getting adjusted to putting all my focus on trading options, I shortened up my list of stocks from something crazy like 200 names to just under 50 names to follow. These are I feel the most volatile and/or liquid options markets so I can just have a list of high quality stocks to follow as well as it being much more manageable. If you want to see the entire list just
click right here. Those are the names that I will be using for this post every week. Of course names will come and go as the market changes but for now that's it.
Like I already said, over this week was just a nice consolidation. This is really good market structure across the indices since the close today was so compelling to the upside. Pretty much the same story across indices though. Implied volatility is plummeting across these markets, making new 52 week lows in the SPY. With the bullish consolidation, earnings season arriving, and the low IV.. this may be a great time to play some debit spreads to the upside and is something I am looking to do.
Internals remain at complacent levels and the interest rates got hit today on the job numbers. I'm not sure why a 6.7% unemployment rate is bearish for rates (no matter the reasoning behind it) but that's how the market feels. If they are going to head a lot higher they need a correction here and there, this isn't the stock market. VIX is at the complete lows which may explain the massive lack of implied volatility aside from earnings plays throughout the market. The S&P percent of stocks above 200 SMA finally has put in a higher low if it can hold it. The next step would be to break the descending highs (not drawn) to the upside and it could spur another leg up in the stock market, which would be fun. One word can sum it up... complacent.
USO - I like it with an hourly long setup above $33.. extended to the downside
MSFT - Very high IV rank.. like a long above demand zone
IBM - if IBM can hold demand zone at $186 AND form a setup I like the long but still in downtrend so carefully
NFLX - If a setup can form above demand zone then I will look to play it.. also confluence w/ weekly 20 EMA
FB - Nice consolidation throughout the week after confirming fib extension setup.. watch for more upside
TWTR - If it can hold above $56 I like it to the long side, very active stock
LNKD - Want to see it pullback and hold 200 SMA (black) on daily and form long setup at least on hourly
CRM - Setup already in play but an entry around here would still be justified
TSLA - Will be watching 50 SMA to hold this week but if it cant 200 SMA is likely to be tested
BBY - I like it long side above $37.. bullish candles are already in place after pullback in longer term uptrend
WFM - Hitting weekly 50 SMA and daily 200 SMA still rising.. need to see more but would take a long side trade on setup
SBUX - If price can be held under 50 SMA on daily will look for short side entry
DIS - Want to see price on daily stay above 20 EMA for long side trade
NKE - Short side only.. risk could be defined above $79
XOM - One of my favorites.. awesome setup to long side after awesome weekly breakout to long side
I did this analysis irrespective of earnings and IV so both of them will be taken into account before I execute any trades and will be adjusted accordingly. Hope you enjoyed it.
Trade well,
-Michael
