We have mixed markets to start the week as the narratives change a bit..
Inflation and higher rates still dominate the headlines but supply chain worries hit their peak last week. China and the Pandemic went on the back burner a few weeks ago.
Earnings season is underway. Last week traders were rewarded for using my process to buy leaders and get risk back on when the 8/21 day gets reclaimed like SPX did at 4380. That was the day after a Red Dog Reversal buy signal last Wednesday.
SPX futures are -20 which makes sense after such a big move. This gives traders a way to cover some hedges, and perhaps add back stocks they trimmed into last week's strength. I'd think 4440-4445 holds to keep this new active long sequence intact. it can even see 4380 and still be fine - just a little choppier.
Now let's dig into some of the individual names I'm watching.
The banks played their usual game. JPM’s report was sold, then they rallied each day after and XLF hit a high of $39.71. It could use a digestive day above $39.18.
My JPM plan worked great. I bought $165 calls into weakness last Wednesday in the $1.50 area. I trimmed over half Friday to get smaller.
Earnings are quickly approaching. NFLX is tomorrow and TSLA is Wednesday. The rest of F.A.N.G. reports next week.
NFLX paid us a few times as it cleared the channel to see $646+. Then it took the week off. It has a decent looking bull flag. I might put on a call spread for Tuesdays' earnings for a move above the recent highs. I'll post it if I do today.
TSLA has been a great relative strength play. It held the 8 day while the SPX was hitting the 100 day. Then it cleared the $807 area and is above $850 this morning. Being away for my race helped me stay long. I'll trim most into this earnings Wednesday. I don't take stock into earnings. I might do an options play but I’m not sure yet.
AAPL did not lead this last move but participated. They have an event today where they are expected to announce new MacBooks and a new generation of AirPods. See if there's any surprises. It needs to hold the $143.50 area to stay constructive.
Positions Disclosure as of 10/18/2021 at 8:08 a.m. ET
