Hey,
Charles here.
Andrew Giovinazzi has a thing for timing cycles. Not predicting them. Recognizing when you're in one.
This week he's got two names that sit on opposite ends of the same idea. One stock has been beaten down by regulation, tagged its 52-week low twice, and is starting to bounce. The other rode a multi-year run, paid him well in dividends, and is now flashing late-cycle signals he's seen before.
Same instinct. Two different directions.
He's adding to one and walking away from the other.
Let's get into it.
Bet on this
I have an affinity for the trading market stocks like Cboe Global Markets (CBOE) and Virtu Inc (VIRT). I have watched markets grow 10x since I started trading many moons ago. Those are not the only stocks in the space I own and even during this downturn they held up well. I was only able to add to one.
That stock is DraftKings (DKNG). Not strictly speaking a trading market stock, the betting lines and prediction markets are a growth business. The UK has had this for years and I was even involved in an early Sports betting business in the 90s. The recent regulatory headwinds have but the crush on this stock but it appears to be bouncing after making a 52 week low twice.
1 YEAR DKNG
I have mostly been selling puts to take delivery in this name and right now I am short the 23 puts. I expect this stock to recover back to the mid 30s this year.
Selling Some Oil Stocks
I cannot be at all upset about oil and energy stocks. To be honest I still own them and mostly for the dividends they pay as I get ready to transition to old guy mode. A stock I held for a while was British Petroleum (BP). Currently the stock yields 4.3%. After buying shares in the mid-20 I parted with them last week.
This is really a trade on the Strait of Hormuz opening within the next week or two. I expect BP to be just another big dividend payer. Since 2021, when I bought them, SPY is up about 50% and BP around 80% plus BP won the dividend race. This is a good time to say goodbye to them and search for more high yield names with some cap gains potential.
Likely BP sees $40 or lower by Jun. It will not be a fast drop but more of a slow unwinding. Most commodity stocks have cycles and oil is likely near the peak of its cycle like in 2023.
To Your Trading Success,
AG
There it is. A stock bouncing off the bottom with a long runway, and an old faithful that's earned its keep and is due for a cooldown.
Andrew's cycle playbook is simple: ride the upswing, recognize the peak, and rotate before the market forces you to.
The real question: what will the team pick on Monday?
Join the Ticker Highlight Show Premium before Monday at 10:30 AM ET to find out.
See you there,
Charles Delvalle
Managing Editor, Option Pit