Okay, not really as I’m a cantankerous old fossil who still clings to his 5 year old iPhone 5SE (I hate large phones and anything > 4 inches is competition). But that also means I’ve been around the carousel a few times and therefore recognize a premium setup when I see one. And let me tell you – big tech was literally throwing itself at me last Friday. And to no surprise a few small gambles taken then have all paid off in spades. Let’s review – or in case you missed out (again) – watch and weep:
Facebook was more of a a watch and learn candidate on Friday but I did pull the trigger at the EOS as a spike low was clearly forming near an important inflection point (i.e. 245).
I’m actually holding this one still but plan on closing it out today.
Yes I know half the nation hates TWTR right now and they now find themselves in court facing up to some juicy allegations. All that however is beyond my pay grade and as such I’m merely focused on extracting some ill gotten gains.
Given the setup TWRT was definitely a go last Friday but I knew that buying a stock position would be way too risky. So I suggested a simple ATM vertical call spread with a small and finite risk to my subs. I cashed out on that one yesterday and probably not a moment too late.
The only thing I regret about trading GOOGL is that I played a vertical spread instead of just a plain old long call or perhaps a call ratio backspread. Juicy moves like these are every option trader’s wet dream. Glad I’m out though as this may turn into an exhaustion candle. Worth observing today and Monday.
Last but not least: Apple – its new ARM-based M1 chips are nothing short of revolutionary and constitute a breath of much needed fresh air in a market that had been stuck in back 2012 thanks in no small part to INTL which for some strange reason found itself incapable producing chips with a microarchitecture below 14nm.
I still run a pimped out 2013 MBP (without any silly dongles) and Apple’s MacBook Air series is the very first one that has me excited. If it wasn’t for the 13” screen size I would have already upgraded in December but I’m eagerly awaiting the release of the 16” model scheduled for later this year.
And I’ll be easily able to afford it given that juicy ramp on AAPL over the past two sessions. For a few days it looked like this one was going to disappoint but I was able to claim my 2R win last evening before the close.
Now let’s take a look at what prompted me last Friday to consider taking all these entries in the first place:
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That’s not difficult to figure out if you have been a sub here for more than a week or two. My ‘monsters of tech’ composite symbol of course. It’s been pushing more or less sideways in a HV formation since the presidential elections and the swearing in of Biden pretty much sealed the deal on a hands-off approach at least for now (the EU has completely other plans and we’ll cover that in the near future).
I’m considered adding TSLA to the mix (this is the MOT composite symbol in addition to TSLA) but I’m not convinced that it’s useful at the current time. This may change over the coming weeks and months as TSLA starts to settle into the S&P, i.e. stat-arbs are incorporating it into their arsenal.
If you are wondering where we are heading next then there are two more charts I want you to pay attention to. The first is the USD which surprisingly is holding – not strong but it’s holding for now. A drop < the 89 mark would pretty much level the path to a much deeper drop which may pick up more steam and trigger inflationary forces.
For now I’m still on the fence as to whether we are heading into a deflationary regime or if we remain in the current inflationary cycle. Whereas stocks are like speed boats currencies in particular are a bit like big oil tankers. Meaning they have a tendency to keep on moving in a particular direction but when they finally turn and pick up steam they don’t look back.
The 90 mark is an important inflection point and the current spike low in the DXY needs to remain or we are most likely going to be dealing with massive inflation over the coming year and beyond.
Similar perspective on the ZN futures. It’s currently trying to heave its carcass back above the 137 mark and a failure here would most likely result in that spike low being taken out.
I’m in this with a tiny Feb 21 call ratio backspread which either loses me about $500 or it banks some mighty coin if bonds decide to make a run for it. It’s a small gamble but obviously worth the risk.
Don’t let the strange format of the credit confuse you. 1 tick in the ZN represents a Dollar value of $15.625. So based on that the credit comes out to about $234.
Max loss occurs if this spread expires right smack middle in the ‘valley of death’. The odds of that are however slim as I don’t intend to hold it until expiration. If bonds don’t make a move within the next week or so I will most likely buy this one back and wait for further instructions.
Happy trading but keep it frosty.
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