Tuesday was a really good day in terms of getting us closer to a buying opportunity, even if it was also a really bad day for most short term bulls. With the FOMC on Wednesday there is a good chance the stock market makes a secondary low, no matter what the FOMC meeting minutes have to say. Names I am looking at that I like –with earnings coming up over the next day or two– are DKNG, UBER, PLTR. These are a bit more risky than stocks whose earnings have passed but these stocks look constructive to move higher. Post earnings report stocks I favor include JPM, V and PYPL.
PayPal reported before the open Tuesday and traded above 71.00 before being pulled back down just under $68.00. A good chance PYPL has further new highs ahead. My only short position was NKE and I exited the puts for a +25% gain today. Probably holding another day would have paid better, but they were NKE June at the money options, so time value is a consideration…. and when it is you have to exit whilst the market is going your way, else gains can evaporate quickly. I am continuing to hold the payal August calls from about $5 lower on the stock.
I think post FOMC minutes I prefer to see a rally that fails and closes near the day’s lows. If that occurs I think that is the best setup for a low to form over the next 1 to 2 trading days including Wednesday as Day 1. I am buying weakness in stocks I like late in the day Wednesday and/ or Thursday, provided no downside debacles first on Wednesday.
Thanks,
Joe
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