Markets closed higher to start the week, with S&P adding .58% on Monday. Asia markets closed mostly lower overnight while Europe indexes are in the red this morning. U.S. futures are pointing to a .70% lower open as I write this. The Dollar, Oil and Gold are lower while Yields are higher.
And this is what UPB is reading this morning: https://www.optionmillionaires.com/morning-reads-302/
Stocks reversed morning losses on Monday, to trade in the green for the session, closing at the highs of the day. Overnight China announced some surprise measures, including its central bank cutting interest rates and also ending the practice of reporting unemployment numbers for its youth. Couple this with the horrible data last week and news of another property developer default ( https://www.reuters.com/markets/asia/country-garden-shares-slump-record-low-after-onshore-bond-trading-halted-2023-08-14/ ) and you have a cocktail that is creating concerns. 8 years ago in August, China was also making headlines. Its currency was failing, its stock market was plummeting, and seemed like it would be a contagion event for the global economy. 'Black Monday and Tuesday' happened... If you traded back then, you remember it clearly. Futures were limit down, stocks were halted, trading was thin, and there were wild swings. Don't think we are anywhere near something like that yet, but certainly something to keep an eye on... especially heading into this weekend. Here are the charts from that move:
The Monday (24th), was the big drop. Tuesday was a drop but then a huge reversal. Indexes then chopped in September before finding some bids in October to recover the losses. Hate to make comparisons like this but history tends to repeat itself. As with most things, when there is smoke there is usually fire. Hopefully this remains smoke and markets aren't gong to see a 10% drop in 2 sessions:
This morning, retail sales numbers for July came in much better than expected. The next possible catalyst for markets will be the Fed minutes tomorrow. Hopefully a somewhat dovish spin and markets can find some footing. Would want to see yesterdays lows hold at $444.38 and then that 50dma at $442.92. If those break I will be adding some hedges:
I added some speculative ANET calls yesterday with the chip space rallying in sympathy to NVDA. CSCO also reports earnings tomorrow and a strong report could put more wind in ANET's sails. Love the chart here and think $185+ comes if the market holds up this week:
There are quite a few setups similar to ANET's, with multi-day pullbacks. ROKU, ALGN, and ULTA all fit the bill.
ULTA finally found some buyers after some positive analyst commentary on retail sector health. TGT reports earrings tomorrow morning, so could also help paint a picture on how ULTA is doing as there are hundreds of ULTA locations inside TGT. May look to add more weekly strikes and also some calls to encompass earnings next week:
ALGN premiums are expensive but I may look to add some spec calls for a move to $375+ if it finds any support today and premiums come down a bit:
ROKU has had 3 pulls from highs since June. The first two saw massive, quick rallies after bottoming... $60->$78 and $67->$96. Not saying another $30+ rally this week, but could be setting up for a move back into the $90s and possibly $100 test. May look at some spec calls for this week on strength and possibly some strikes into next week:
Lackluster sessions for VKTX and WW yesterday with VKTX ending a 4 session winning streak. Still looking to add some later strikes on both.
Thankfully passed on adding SE. The stock is getting punished this morning after a big miss on EPS and Revs. Could be a bounce play if $47 holds. Will be watching :
And this is what I am watching today: SE, WW, VKTX, ROKU, ALGN, FZA, TZA, NOW, AVGO, LRCX, ULTA, CMG, QQQ, CMG, SPOT, TEAM, ISRG, BLK, IBM, and NFLX.
Let's have a great day!
-JB