Yo, Pit Crazies,

Most of the trading world is waiting for the Fed to throw Thor’s Hammer around next week.

President Xi tossed his own version with the most Maoist rhetoric from a Chinese Premier in 40 years.

Chinese and Hong Kong equities did not like it.

They posted the lowest closes since the 2008 financial crisis. China’s GDP is growing 3.4% this year. Not a lot for China lately, but not crisis levels, either.

Below is a chart of AliBaba Group Holdings Inc. (Ticker: BABA). Darn near back to its IPO price – or zero growth in 7 years.

Something is up …

10-year chart of BABA with one-day candles.

Why is China in the tank … and is there a stock to play here?

Leaders Have Their Own Agendas

Just ask Putin.

I am not sure who is winning in the Ukraine war, but that did not stop Putin from trying. 

Xi is eyeing Taiwan and said so this weekend. Folks are hitting the exit.

Jack Ma, once the richest man in Asia, is a ghost. The policy implications are clear – and a reminder once again that Western democracies are not perfect, but seem better than the alternative.

This brings me to Taiwan Semiconductor Manufacturing Corp (Ticker: TSM). Taiwan is already the hub of semiconductor production for the globe and would like to keep it that way.  I think the CCP wants to own that business, which could become messy. That is why TSM is trading near pre-Covid lows.

I am pricing TSM Jan. strangles right now. I would like to just buy the calls, but these absolute rulers have been pesky lately.  It reminds of my high school government class and Lord Acton:

“Power corrupts and absolute power corrupts absolutely.”

Nov 8. is just around the corner, and what could be the start of a new market cycle.

The Rundown

Nitro Trader

I closed my Tesla Inc (Ticker: TSLA) put fly for a 25% gain and my SPDR S&P 500 Trust ETF (Ticker: SPY) call calendar for a 42% gain.

OP Mentoring

My long SPY call spread closed for a 33% gain and I have a few days to ride the long Proshares Ultra VIX futures ETF (Ticker: UVXY) call spread position.

SPYMaster

The big rally in SPY these last few days gave me the opportunity to close my SPY call spreads early for a 26% gain, leaving a VIX Nov. 16 call spread on. If I don’t get any VIX action I will just close the VIX call spread and book my fifth win in a row here.

To Your Trading Success,

AG