Happy Saturday and welcome to our Weekly Digest! It has been a busy week on Wall Street! The most expected event of the week has been the FED meeting on Wednesday. Jerome Powell delivered a balanced speech, in which he officially commenced tapering at a pace of $15 billions per month. He acknowledged the rampant inflation and pointed out that the FED remains flexible in its approach.
The market reacted very well to the minutes and posted an impressive end of the day rally which continued into the end of the week. The tech sector which was supposed to be pressured took the minutes in stride and the $QQQ went above $400 for the first time in history.
We had a great week of trading with multiple winners as we remained tactical. We took advantage of our approach and went long after the first reaction to the minutes. We had impressive gains in the tech sector, as we took advantage of the rise in $AMD, $MSFT, $AMZN and $GOOGL.
Our big bets for this week have been the small caps $IWM and the biotechs $XBI which started to act very well. We have been long several call plays for these indices which are finally playing catch-up to the overall market. The $IWM had an impressive breakout move off its yearly channel and went above 240.
Pfizer’s announcement on Friday in pre-market, of a new pill to treat Covid with an efficacy of 90% helped re-opening stocks march higher and we were well positioned to take advantage through $NCLH, $UBER, $ABNB, $F and $GM.
In terms of earnings plays, our biggest winners have been $ABNB and $SHAK while $PENN and $SQ disappointed.
The market has reached an extreme overbought level, and we are cautious going into next week’s action. We prefer to be lighter over the weekend as a pullback may be in the cards. We are more confident in the re-opening plays pushing higher rather than some very extended names in tech such as $AMD, $NVDA, $TSLA. We are also interested in some wellness names as the group got a push late on Friday on some news of a possible new bill. We are long some $MSOS calls and $GRWG common stock.
With so many great winners, it is difficult to point out just a few, but we will go with the following:
$IWM chart
We became bullish on the small caps last week and we have added to our call spread 230/245. On Monday’s breakout move, we closed the short side (245) and let the 230 ride. This was a great trade which we closed on Thursday. In order to remain involved in the sector we put on a different spread for the middle of November, 240/250 in case it continues higher. The measured move of this breakout was to 245, so make sure to book some profits as the small caps might need a few sessions to digest this move.
https://www.tradingview.com/x/XQebAJsH/
$AMZN chart
The e-commerce giant finally woke up and we became involved on Wednesday through an options strategy 3530/3550 and common stock. It had an impressive 3 day rally which rendered a 400% gain for our options and a hefty profit for our stock. We have exited for now as it has become a bit extended. Keep it on your radar for the next week.
https://www.tradingview.com/x/UBB7O0Oi/
$ABNB chart
We bought some $ABNB calls ($172.5) before earnings on Thursday as the chart looked very tight. $ABNB posted an impressive quarter and offered great guidance. After the report we bought some common stock in after hours around 178 which we sold on Friday at 200+. Our calls which we bought for 6, we managed to sell at 26. It was a great trade for our portfolio in this new name that we have approached.
https://www.tradingview.com/x/Q0phItaY/
It has been a great start to November as our portfolio posted a gain of 3.5% this week and we managed to have 5 consecutive green days which does not happen very often. We realize the extent of the recent rally and prefer to be more conservative going forward. There are still plenty of broken names and sectors and one has to continue to look for opportunities. Do not get over your skies, stay the course and remember that here, at Eclubtrading, We Grow Together! Have a great weekend.