Yo Pit Crazies,
I did a full day of classes yesterday, well half-classes, so I’m getting back to normal.
Elsewhere, J-Pow is going to speak, yet again, on the taper or not-too-taper dilemma, as the media runs with the Delta news and that little dose of $4.5 trillion in spending looms.
The Fed is trying to ride one of the chutes in Jackson Hole. I tried that in college years ago and let’s just say I ended at the bottom of the chute. Not quite a full tomahawk, but close. The Fed does not want to get out over its skis here.
Does a growing economy need the Fed to buy billions every month? That is a question for Griff in Power Income, so make sure you’re following him there.
Powell will have to do the two step and signal:
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- The Fed will keep inflation in check
- The Fed will keep the economy going
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It is hard to signal both of those things.
Some stocks are more sensitive to the two-step than others so read on for the two step trade.
Let’s take a look …
Sensitive Souls
I don’t think tech and bleeding edge tech will like rising interest rates …
We’ve have had a few good tech wrecks this year and higher inflation was one of the major sources of the selloffs.
The next thing is the habit of changing position. J-Pow will come out with one pronouncement and then reverse course. Recall inflation was a lock about a month ago and look at all major commodity stocks, oil and gold. Palookaville.
The Invesco QQQ Trust Series 1 (Ticker: QQQ) looks vulnerable.
QQQ stocks don’t want a stiff rise in rates and after changing course several times this year J-Pow might give folks what they want.
Or he might sound too hawkish.
QQQ 2 week chart with IVs on the bottom.
Trade It
I think one QQQ Sept. 03 straddle could work with two VIX Sept. 15 18-strike puts .
If J-Pow can’t do the two-step, we might see QQQ back to $360 as a lot rally has been on a dovish stance.
If he can do the two-step, it will be off to the races, VIX goes to mid 15s and the big indexes set yet another all time high.
The Rundown
I mentioned Griff earlier. He writes the Power Moves letter and now hosts a Macro Monday show for Trading Legion members — and he’s been killing it on the China trade lately:
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- 8/18 Bot KWEB Nov-19 55 calls @ 1.05
- 8/24 Sold KWEB Nov-19 55 Calls @ 2.5 closed up 138%
- 8/19 Bot KWEB Nov-19 45/50 Call Spread @ 1.80
- 8/25 Sold KWEB Nov-19 45/50 Call Spread @ 2.8 closed up 55%
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Trading Legion is leveling up with the addition of Griff, plus it’s the only place to get live access to Queen of the Candlestick Licia Leslie — who will join us this Friday on the OP Markets show.
In the past week alone, she’s closed trades of:
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- +50% in BAC
- +85% in FCX
- +123 in WFC
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Of course, that’s all in addition to Trading Legion’s 4x weekly live access, small group mentoring sessions, custom courses and weekly trades.
If you’re ready to step up, or just want to learn more, give our Customer Care Team a call today at 1-888-872-3301 between 9 a.m. – 5 p.m.
And be sure to mention that you read Option Pit Exclusive today to claim a special offer.
To Your Trading Success,
AG