Yo Pit Crazies,
Apple Inc. (Ticker: AAPL) and Amazon (Ticker: AMZN) both reported on Thursday.
And both tech giants were down after hours.
We’re not talking Crater Town, but AMZN was off almost 10%.
The multiple the market has assigned Big Tech is coming in as Silicon Valley’s COVID advantage starts to wane and people just go back to normal.
Unfortunately we are still left with the hangover of the Fed’s extraordinary activity coupled with unprecedented fiscal stimulus.
Stocks rallied yesterday big time on, get this … recession hopes and that Fed won’t ratchet up rates that they and the US government created with historic spending!
Like I said, a hangover – but I have a hair-of-the-dog trade.
Stocks Are Running Out of Good News
As doom-and-gloom as I appear to be right now, I am a bull by nature.
When I started in this business the Dow Jones Industrial Average was at 2,300.
The index closed at 33,916 yesterday.
So, I have cause to be a bull … but every now and then stocks get into a pickle.
And that’s where the broader market is now.
Like I said earlier, when we rally on a recession possibility, that is not great news.
It was a subject in my Pro Small Group class yesterday because the VIX stopped going down
Note Vol Man kite surfing the IV in the May cycle for the S&P 500 while his kite is lifted off by the crazy rally in SPX:
One-day SPX with one-minute candles: SPX May IV is red.
The rally in SPX was so sharp that IV stopped dropping after a while and then turned back up. I saw that as a sign the reversal in SPX might actually pick up steam.
I added for myself the SPY May 6 420/405/390 put flies for 157 and the VIX May 18 25 puts for 1.25 during the Pro Small Group session.
To be honest, I might get a chance to close the put flies today.
Remember: SPX rallies without confirming IV drops usually don’t hold up.
VIDEO: Here is a sample of our first Option Mechanics class from yesterday.
The Rundown
Capitol Gains w/ Frank Gregory
My open Exxonmobil Corp (Ticker: XOM) is running up 50% and sold some call spreads to guarantee a 38% with a chance to earn over 100% if XOM can run to $100
Big Money Flow
Mark was the flow with a 44% gain in Cenovus Energy Inc (Ticker: CVE) Jun 17 calls and a 44% gain.
Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session.
Cat takes some more shekels off of the table.
Joe W liking the Cap Gains Trade:
To Your Trading Success,
AG