It wasn't a good day for the markets, but it was a good day for alerts. We had 4 go off today. It was the worst day for the S&P in a month. A disappointing U.S. retail sales report from the Commerce Department served as a key source of concern for equity traders, with sales dropping 1.1% versus the 0.3% dip expected. Also, Chinese tech giants Alibaba and Tencent declined after a new set of regulation rules came out by Beijing. Tomorrow we have more retail earrings, notably TGT and LOW.
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As I have been writing about and predicting for well over a month now, the stock market is about to correct. It is well over due. Just based on seasonality from Trend Spider's AI alone, we can see that VTI's (the total stock market etf) worse month is September and we start to see a decline in late August over the past ten years.
These type of corrections are no surprise, happen a few times a year, and don't necessarily lead to bigger recessions. When things are to hot, they will cool off eventually. So if you have been listening and reading my daily blogs, you are already prepared and waiting for this. It is a great opportunity to take profits on some of your high growth plays, and keep cash on the sidelines for when things do pull back for a mid-September buy. Investors are about to transition their money into more holiday/winter stocks. I think the dip is coming, and I think this is the beginning.
As far as options are concerned, these are the times to being dong majority put plays, going small, getting out (taking profit) fast. Market consolidations bring more choppiness, and short term options aren't really well suited. Have you noticed most of my option alerts have been mid to longer term? There was a reason for that.
Overall we will be ok. I don't believe this is the start of a recession. No need to panic sell. However, it is important to understand what is happening, when it happens, and what we can do to best limit losses.
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Positions this Week
$MA +7.9% (Calls)
$CVX -5% (Calls)
$AMZN (Still watching this larger play; I'm patient)
$EMKR (Taking into account market wide consolidation, will wait for tomorrow to see)
$NIO (Late in the day)
$NVDA (Late in the day)
$BTI +13% (Closed)
$F -25% (Cut) - Automakers got smashed. Is worth reviewing later on.
$MS +37% (Closed)
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$MCB, Metropolitan and Commercial Bank, has earned a new alert Put at resistance. I'm not in a rush to get into this position, but this bank was recently brought to my attention by crypto.com which is using them as their bank for their Visa card. Overall, I love the play that they have made and exposure to the cryptocurrency industry, but it looks like the bank is overbought right now. Coupled with a market correction, this could turn into a small to medium sized money printer - for lack of better words.
$TGT is next on the list of new alerts. Target is about to report earnings and I think it will be pulling back to at least the 50MA; it is on it's way. I'd recommend going small here and consider vertical spreads.
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New Alerts Triggered
Proceed with caution for all positions the next couple of weeks. It is a hard time to trade when there is a lot of uncertainty. With that said, proceed with caution with EMKR. It might be blowing through my support and heading to the volume shelf below. I'm going to wait until tomorrow to consider this position.
$TSLA triggered when it touched the 50MA, and I was really tempted to get in it. If I did, I'd be up 5% right now. However, considering the market wide consolidation, I'm waiting for more confirmation candles tomorrow. It is a more expensive position so consider a spread of say $680/$700.
$NIO triggered and it looks like it is going to be a clean bounce off of lower support. I'm more confident about this one because they have a lot of backing from Beijing, unlike BABA. It triggered to late in the day to do anything about it, but let's pick up a few contracts tomorrow.
$NVDA is also looking like a clean bounce is forming off of the 50MA. Go small here as it is approaching earnings soon. Find a way to get cheap contracts, and it could be worth it. However, I never take such large positions right before earnings.