Post FED reaction

Good morning!

I hope everyone had a prosperous day yesterday, as it was jam-packed with or best-case scenarios. The small caps were impressive and broke out of the channel, which was a beautiful source of cash flow, I trimmed 2 thirds of my position in $IWM as it can have a digestion kind of day. Tech did not fall apart when Powell announced the results of the FOMC, as the announcement of tapering starting in November has been compensated by the fact that rates will not increase until summer next year. The first reaction in tech was a push higher, and the giants followed – $AAPL, $MSFT, $AMZN.

Now that the earnings’ season is approaching its conclusion and that the FED gave its guidance for the near future the market should become less volatile, and easier to navigate. I took advantage of last night’s move, like I told you to participate in order to create cash flow. I trimmed into the last hour’s rally but I am still invested in the tech move, together with the small caps.

$QQQ Chart

The $QQQ was strong all day, continuing this bullish move the middle of October, staying above all moving averages and making highs after highs. It has been very stock specific though, which got me worried, however yesterday afternoon the whole of tech participated in the post-FED rally. I picked $AAPL, $MSFT and $AMZN and all three went up on the news. I got out of $MSFT as it is extended, took my gains out of $AMZN and bought a call spread for Friday (as it is difficult to trade) and left 2 thirds of my stock in $AAPL as it has plenty of room to grow. Watch today’s action and $388 should hold for us to stay bullish on tech.

$IWM Chart

Look at this beauty, the longer it stayed in this channel the bigger its move out of it. I took off my short term call options, and left my long term leaps. I am still invested in some small caps, but I cautious as they may have a digestion day and I do not wish to give my gains back. It should hold half of its flag for a leg higher, which is at around $236.

$PYPL Chart

I have been following this stock’s hard fall for the past 2 weeks and wondered when it will make a reversal in order for me to approach it. Yesterday in the. last hour of trading it did just that and I have participated from $327.80, and trimmed a small portion. It has earning next week so I bought some call options also, in order to fully participate in this move. For this stock to be any good it should not go under the level mentioned before and in this tape or the next it should manage to get to the 8 day EMA and above.

I would advise being careful today, look at the levels and use the knowledge I provided in these Daily Charts, however stay tactical and if you are over invested you can start buying some puts in $QQQ and $IWM in order to protect your positions. The reaction has been positive with regards to the FED statement and this gives us confidence to stay invested. The small bios $XBI have been a pleasant surprise to us, as they are incorporated in the small caps and finally got cash flow into them, which gave life back to our small hold of $MBIO. This is just a side note for you guys to see if you want to get involved in a spec bio, which can be a nice hold for the long term, and you can play around with it. Tech has been strong and it continues this move after the FED, which made me more bullish, but tactical at the same time. Don’t stay in tech if it loses momentum because it has had an impressive increase and it can have a digestion period. Historically speaking the small caps and biotech have been growing the most in the 4th quarter, and this move out of the channel seems to be promising, therefore I am more bullish in these sectors in the past few days, and I am continuing to be.

Have fun today, it is almost the end of the first week of November.

We Grow Together!


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