Wow! Hard to believe election day has come and gone, but sadly, not over. Way too much for me to unpack here.
Instead, I would like to look at the ruling that favored Uber and Lyft.
Can I just say, GOVERNMENT KEEP OUT!
If the drivers cared about being employees, they would work for someone. Isn’t the whole appeal of being a driver, or any freelancer for that matter, to be your own boss; not have someone hovering over you.
Uber and Lyft made huge upside moves today on the news.
Looking at the chart of Uber, I see a Japanese candlestick indicator that is easy to spot and easy to understand.
We’ve talked candlesticks before, but just in case, here’s a quick refresher:
Did you know the Japanese were the first to trade futures (rice) in the 1600’s! The Japanese have been using technical analysis to predict market movements since the 17th century. Something that has lasted that long has got to have some validity! Actually, when reading charts or using technical analysis Japanese candlesticks are one of the most logical systems tracking human sentiment.
On the charts, a Japanese candlestick shows the opening price, the highest price traded, the lowest price traded and closing price of each day.
The black candle represents a down day, the underlying closed lower than the opening price. The white candle represents an up day, the closing price was higher than the opening price. So a black candle shows more sellers than buyers and the white candle shows more buyers than sellers.
One indicator, called a doji, is pretty easy to spot on the chart and easy to understand. A doji occurs when the buyers and sellers have balanced out and is represented with the opening and closing price to be the same.
So a market moves higher when there are more buyers than sellers and moves down when there are more sellers than buyers. The charts show this movement. The occurrence of a doji appearing in a trend could indicate the end of that trend. The buyers (or sellers) have been exhausted and the sellers (or buyers) may take over.
I emphasize COULD because nothing is guaranteed in trading.
Let’s take a look at the Uber chart:
Yesterday’s candle is a doji. Uber gapped up from yesterday’s close at $35.77 to today’s opening at $40.66 and closed today at $40.92.
Also, the options implied volatility at 54.51 is lower than the stock’s historical volatility at 66.62 which I like when shopping for cheap options.
With today’s doji in Uber I like the idea of buying some cheap puts on the idea that the doji is signaling a trend reversal. Uber just may have surged too much too fast.
I like buying the Nov20 $41 puts at a 57.85 volatility and selling the Nov20 $36 puts at a 63.47 volatility paying $1.60 for the spread. I would hold this spread to $1.10 on the loss side and would get out for a win around $2.50.
Thanks for reading…See You Next Tuesday!
P.S. – Yesterday Mark and I, along with the rest of our fabulously growing team, hosted a special post election event I just had to tell you about. Sorry about the late notice but they are fun and chock full of good info. We will send out a digital report of all the goodies in case you missed it!
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