SPX all time highs with Apple not at all time highs so can the market still rally?

BY ANDREW GIOVINAZZI

February 5, 2024

Yo Pit Crazies,

There are still open slots in the ODTE challenge with Mark and Licia and they are off to a good start. Check that out here.

Apple Inc (Ticker: AAPL) was the biggest FANG disappointment in this earnings cycle. The old FANG was Facebook (META Platforms, Inc (TICKER: META), Amazon, Netflix and Google (Alphabet Inc, Ticker: GOOGL) and really were the smartphone and cloud titans. Each of those companies is either a $1 Trillion dollars or more save Netflix Inc (Ticker: NFLX). NFLX is still showing big growth as evidenced by its jump post earnings. Amazon.com (Ticker: AMZN) was up but still not at the COVID highs. META also is experiencing new growth getting back to its social media roots.

While the old FANG provided and still provides growth, some of them are getting longer in the tooth. AI is the next new technology wave but note that Microsoft Corp (Ticker: MSFT) was not in FANG but is all over the AI buzz. Will AAPL somehow harness AI? Maybe but for right now they sell expensive gadgets and services all over the world.

The AI path is not clear and it should increase AAPL revenue growth. Just a 6% jump in revenue YOY with a 30x multiple is not the AI number folks are looking for now. My guess is that some money will cycle out of AAPL and into other names. That keeps SPX moving higher.

AAPL 30 day chart

That means Big Tech earnings so far are very successful.

But valuations are nosebleed highs.

How to trade that now?

OPMentoring has a path to long contracts but theta positive trading

The opinion I have that money moves out of AAPL and into other higher growth names is just an opinion. Putting a trade around it is a different story. In my OP Mentoring session on Thursday I bought SPDR S&P 500 Trust ETF (Ticker: SPY) 500 strike call calendars and VIX call spreads for March.

The SPY Calendars gained 30% by midday Friday and surprise, my VIX call spreads were up on the day. Not a lot but enough so I closed my SPY calendars, I think they hit near 50% gain at one point, and will hold my VIX over the weekend to see if there are some fireworks. If not, I will close them Monday and move on.

In a market like this, where some stocks and indexes go in one direction, I do not want to fight that direction. The scarier vol signal also wants to keep some dry powder in my back pocket.

That type of trade is something my students learn in OPMentoring. Learn how to trade with confidence at the top of the market. ODTE can work too since Mark and Licia are looking for later day signals to ride the daily momentum.

To Your Trading Success,

-AG