Good morning and Happy Saturday! It has been a mixed week on Wall Street with the tech sector making new highs while the S&P and Dow Jones somewhat stalling. The laggards of the week have been the small caps, the biotechs and the financial sectors. We are still waiting for the FED chair nominee which should be announced most likely this weekend. The breadth of the recent rally has been extremely narrow as money hid only in a few tech stocks. As a result, $AAPL, $MSFT, $GOOGL, $AMD, $NVDA made new all time highs, while $AMZN had an impressive weekly gain. On the other side of the spectrum, we have a plethora of stocks that are well below their exponential moving averages in complete disarray.
We managed to navigate a difficult week very well for our portfolio. At the beginning of the week, we reduced our exposure to the wellness sector and focused on the Metaverse stocks. We rode the full wave in $RBLX before and after its investors day, while witnessing $MTTR making new yearly highs as well. We soon exited, booking our profits after the parabolic moves. We became involved with $AAPL mid-week through stock and options which offered a great boost to our portfolio by yesterday’s close. In addition we were involved throughout the week in $AMZN through stock and options and we had lotto plays for $NVDA’s earnings and for $TSLA yesterday. All-in-all it has been a profitable week as we continue our good performance in November.
For next week, we are going much lighter as we wait to see if the recent breakout in the tech sector continues and fuels a bigger rally, or if investors will start booking their profits ahead of Thanksgiving. We do have some call options for $AAPL, $FB, $AMZN and $TSLA, but prefer to keep risk smaller and do not hold any long positions over this weekend, except for $TSLA.
Seasonality is clearly in favor of the bulls going into next week’s action. However, the constant rotation among sectors and even stocks within sector is difficult to follow and understand, and therefore one has to be careful before going all in expecting a Santa Claus rally. Keep an eye on Covid developments in Europe in order to better understand how this will impact business and investors’ appetite going into the last 6 weeks of the year.
There are plenty of good trades to highlight for this week’s edition. We have decided to go with $AAPL, $AMZN and $RBLX
$AAPL chart
$AAPL woke up on Tuesday as it poked its head above the moving averages. We bought the stock and some call options for Friday. As news broke out on Wednesday of new developments for $AAPL’s electric car, the stock skyrocketed above 153.17 which had been the channel resistance for a while. We added through this level but exited our calls too early, if we look at what happened next. On Thursday and Friday we continued to be buyers of any dips and ultimately on Friday we exited the stock above 160 and put on some 162.5 calls for next week. Wow, what a great trade and clean technical breakout! As $AAPL became a bit extended from the moving averages, we decided to have less exposure going into next week, but will definitely keep it on our radar!
https://www.tradingview.com/x/ZCtNOnvL/
$AMZN chart
$AMZN has been on our radar in the past few weeks as it showed multiple signs of relevant strength. It was somewhat odd given the fact that this stock did not have great quarterly earnings and its guidance for the next one was rather poor. However, as was the case with $NFLX last quarter, investors started to pay more attention to this e-commerce juggernaut and so did we. We came in the week long some $AMZN 3650/3750 for January. On Thursday we saw $AMZN showing great strength as it overcome 3605 its channel pivot resistance. We bought some common stock and kept them for a wild ride past 3700. This was a 1 day trade which was a great boost to our overall portfolio. In addition, our calls are advancing nicely as $AMZN is looking constructive for a new all time high by the end of the year if the market conditions remain somewhat similar.
https://www.tradingview.com/x/XUpRVspr/
$RBLX chart
$RBLX continues to make us a lot of money as it is acting very well. After we profited from its earnings results as we had call options on, this time we took advantage of its investors’ day. On Tuesday, $RBLX opened lower and we bought some common stock around 104 as we thought the investor’s day catalyst would at least offer a red-to-green cashflow trade. What happened next took us by surprise! We added through 110 and then kept the core position for a wild ride to 130+. This was a great calculated trade with minimum risk. In addition, at 130+ we exited our 1110 calls for January in order to reduce some risk going into next week.
I hope you had a great week and managed to take advantage of our recommendations! The recent rally rested just on a few stocks and one has to be careful going into next week’s action in case the music stops.