Bear Bounce But Different
This week into next will be a little counter trend
Was a great week and this weekend I want to update what I think is about to happen….
Bear bounce with a little more than normal
Looking past this week
A couple single stocks I like to the upside for a trade
Looking at this chart of the S&P you can see we have a confluence of the 50 day moving average at one of my price levels which was the lower level of the 6 month chop. I think we see this bounce die out at this level, but this bounce will look like we are going back to ATH’s. But I think once we pass vixperation on April 15th you will want to lighten up on longs at the minimum if not look for shorts. Everyone has gotten too bearish and they even were on the way down that’s why we saw puts so over priced and they didn’t pay out like you would have thought on some of these declines. But this is what you want to see if you are bearish, why? Lot of people kept longs on the book and hedged with otm puts that didn’t pay, when this happens eventually they are forced to raise cash and liquidate those longs….thats when long volatility traders get paid like me. Looking at that chart you see tons of flat open to close candles showing sideways action that just ate premiums, I am going to say we will see bigger swings once longs are forced to liquidate once they can’t take the pain of longs stock and put hedges going down together. Circle April 15th and assess the market after that date which should begin to show market weakness as we approach April opex.
Looking past this 2 week window I think once we hit earnings season we are going to see some ugly action in stocks to the downside. Stocks have imo priced in Iran almost entirely outside of some major move like a nuke or a terror attack on US soil I think one had to ignore the war headlines going forward as the market is pricing in taco at 6300. What’s not priced in is the effect of $100+ oil prices and what effect that has on the economy plus the strait if it becomes closed. Oil is the base input of everything we buy as the raw materials can be petroleum based or the means of getting other commodities to the end user use oil to produce products/process/ transport them. This will be the wildcard for earnings as how has the consumer pulled back or how has the input prices of oil affected companies profits. I think earnings season is going to be the start of “sell in may and go away”, we could see huge drops in names that have seen profits get hit to rising cost and lower end demand from consumers. I think after April opex it’s game on for the bears….
Some individual names I like for the next 2 weeks are names I recently said may have topped….I am retracting my bearish call on the memory and photonics names for now as I did some research and these names could make a big move to the upside. I am not as interested in memory as they have really gone up this year but could still move higher into opex.
I like AAOI 0.00%↑ the most as it’s trading at a 8 billion dollar market cap compared to competitors like LITE 0.00%↑ trading at almost 60B dollar market cap. AAOI has gotten more new orders this past week and is growing revenues faster than any of its competitors, if it gets the same market cap as LITE it’s a $700 stock and quickly. I am in short dated calls and common going into next week looking for new ATH’s and if the news is good enough I think we are pushing into 200’s by opex.
I am still short Bitcoin but dramatically reduced my position, I look for Bitcoin to make the move first lower as it will lead equities lower…or higher. This is why I reduced it as if we get good news or just a move higher it could get back to mid 70k…where I will reload or if it breaks towards 60k I will chase and add shorts.
Also I touched last week on the cpu thesis and I think it is alive and strong, watch AMD 0.00%↑ INTC 0.00%↑ ARM 0.00%↑ For an upside breakout
That is all for now. Happy Easter!