Today was a very choppy day, and investors are awaiting the latest Fed decision. I am still taking it pretty easy after this weeks China Evergrande selloff. I was on vacation for the past couple of days and have cut positions. I'll be reviewing all alerts and adding more today.
The Evergrande selloff was overblown for US equities to dive that much. The Shanghai Stock Exchange is now open and is only down less than a percent at the time of writing, and is more than likely because of the route of US equites. Maybe Chinese investors don't know the full extent of the situation yet, or maybe Beijing lulled them all to sleep.
*Update* China Evergrande to make payment Thursday. Futures are popping up.
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For markets, the Fed's latest decision will be one of this week's banner events, redirecting attention toward domestic monetary policy after fears over fallout from the potential default of Chinese property giant China Evergrande set off stocks' worst day since May earlier this week.
The monetary policy statement and subsequent press conference from Fed Chair Jerome Powell Wednesday afternoon are expected to lay the groundwork for a near-term announcement and start to tapering of the Fed's crisis-era asset purchase program, which currently comprises purchases of $120 billion per month in agency mortgage-backed securities and U.S. Treasuries.
The anticipation of tapering has been a source of consternation for market participants over the last several months as the central bank escalated its discussions around beginning to remove one of the key sources of support to the pandemic-stricken economy.
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New and Updated Alerts
TXN resistance is still in sight having barely missed the alert trigger last week. It gapped down to the 50MA, and looks like it is going to retake lost ground. Overall, the safest play here is puts when the underlying reaches top resistance, and hold those back to the 50MA or the bottom of the large volume shelf.
NVAX take two. This alert just triggered a couple of days ago and if you are in this position, you are profiting right now. However, I am pushing a big reset and redoing all of my alerts. Ideally, go for at least a month out, take profit in the green box around $250.
Similar story with my T alerts. It went off a couple days ago when it precisely bounced off of the 50MA and continued its downward spiral. Waiting to get back in on the action with some puts off of the 50MA again. If you are in this position, from last week, congrats! Makes sure you join the VIP discord so you get my alerts pinged to your phone in real time.
YUM blew through the 50MA, so I have adjusted the alert accordingly. If we can get a bigger bearish move to the 180MA, that would be ideal as there is a bigger volume shelf, indicating a safer entry. I don't expect to much out of this one, so the position wouldn't be a big one; consider spreads.
Here is a good opportunity with JPM. The China selloff has handed us an oversold JPM sitting right on the 180MA, YTD VWAP, and a big volume shelf. I like EOY calls here.
XHB is still nearing my lower support which is also on a large volume shelf. For me, this is a long term play, either LEAPS or commons. Get ready to dollar cost average in the yellow circle (180MA), if the China selloff causes markets to fall further.
Get ready to sell the news with AAPL. Their iPhone 13 is coming out and I am thinking we might get a more downward move towards the 180MA, YTD VWAP and large volume shelf. This is a hard one for me as I still think the company is undervalued. I'd put a price target of $180 on the stock, however Septembers have notoriously been bad for Apple. If the alert doesn't trigger, I'll readjust in a couple weeks.
As far as SPY and the other large indices, I had started to draw out and measure the dips from last September to see how much lower we could go this month. It seems like we might only be half way there. Of course, nothing is guaranteed, and history doesn't always necessarily repeat itself, but the 180 and YTD VWAP are both lying down there. For now, I'll remove the alert until we know more of what's going on in the next few days/week.
The SQ alert from last week went well. We are almost through September and into the worst month of all for the stock. I want to take a bearish position and will be setting a put alert for a move off of the 50MA, back toward the 180, YTD VWAP, and volume shelf.
One of my favorite stocks to buy puts on is EBON. Always has gone fairly well buying puts off of the 50MA, taking advantage of its downward spiral. Now is no different.
DPW bounce off of the glass bottom. Go small as this one is just a lottery. Weekly/monthly calls.