Stay Sharp

2021-04-08 | Jack Roberts

This entry isn’t really about macroeconomics, it doesn’t really tippy-toe on the large picture at all. However, I do have some interesting data that can be useful during these extremely volatile times. Let’s jump in. We know we are just a few months from Summer, and things can all of a sudden get quiet for the summer. I encourage you to consider the opposite. There has been a ruffling of the markets’ “feathers” and I think March was a sign that maybe we can now step into the light of market conviction. This is what I love about the market, the conviction. There really isn’t anything like the feeling of riding the market higher in the eyes of all those that DARE to short this market. This market is resilient and should be treated like such.

My favorite setups based on chart formation, Squeeze, and short interest (at times) are as follows… I really like e-payments, so this could be Square (SQ) or PayPal (PYPL), and these are my favorite long-term growth stocks. Technically, they respect the typical moving averages that allow me to have more conviction with the markets. I’m certainly stoked about this market. Remember, a bullish market goes up until it doesn’t, and more money has been lost predicting a bear market than actually participating in it… so you might want to keep that in mind.

I made a new addition to my trading plan and mindset. Concentrate more on defining my risk. That means more Butterflies, verticals, and unbalanced flies. If you are a new trader and don’t know of what I speak, just know that in the options world there are particular options strategies that can be very inexpensive but at the cost of a lower probability trade. It’s not a bad thing because when they work out, they work out great. Square and PayPal may also benefit from a rotation out of semiconductors. With the shortage of semiconductors, we might see more of a larger move in payments as it relates to crypto and tightly correlates fundamentally. But stylistically, I mean, come on folks – crypto is everywhere and it’s here to stay. But I digress…

I want to talk about what I love right this very moment. I love VALE and FCX. Both are commodity plays with great technicals and you might even say you are buying the dip. In the eyes of raised Nickel demand, and copper demand increasing year over year, these are two obvious longs. I really don’t like GLD long or even SLV at all, you have permission to short these.

Anything that isn’t a commodity is a high short interest stock or something that can make a huge move. So I have shifted my focus to FUTU, CHWY, and yes, Wayfair (W). Wayfair is interesting at this very moment because the Squeeze is fully intact and firing.

So you might ask, how am I participating? I’m selling put credit spreads and buying long calls (typically Delta 60’s to Delta 40’s). Depending on how aggressive I want to be, I typically also sell deep in the money put credit spreads typically 5 days out.

And that is the point, I want to be in and out as quickly as possible within a few days. That’s why John Carter’s recent Google trade is interesting, because – it wasn’t easy. And as he and everyone else knows, the big ones aren’t hardly easy ever at all. So I’m keeping a narrow and reasonable focus on what has the most upside at this time. If you have other high-beta picks, I respect your game. I’m kind of a high-beta guy myself. Definitely not dull at all when they start to move.

Overall, my feelings are mixed on how strongly we move to the upside. But undoubtedly let’s not get it confused. I am extremely bullish on the market. We just have to respect the right setups and pounce when we can after the pullbacks, which… let’s just admit it, no stop gets left untouched, so expect that.