In measures of option positioning and short interest ratio there are not too many short side bets and not much hedging of longs. That is usually the cue for a correction. However against that backdrop along comes the first signs of rotation in the stock market. For months the averages have moved up on the back of AI stocks with the vast majority of the other sectors showing flat to negative returns. Rotation means that some of these other sectors are starting to look bottomish. For example NIKE, which has been quite beat up, formed an outside reversal candle on the weekly bar last week. Add in IBM, Visa, TSLA and some important secondary stocks look more bullish. I also like the long term bond ETF (TLT) and I am long October and further out call options.

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Last Tuesday initiated an AMD spread at $5.20 as delineated here. Even though the stock really didn’t do what I thought, the high time premium on the short dated option proved to be enough to eke out a 50 cent profit by Friday morning. Not a huge win, but it was a win despite an unexpected price movement. Monday certainly I need to see how the market settles after triple witching expiry last Friday. But keeping my eye for opportunities in NKE, IBM, TSLA and V call options.