DailyPlay – Partial Closing Trade (LYFT) – March 24, 2023

Partial Closing Trade

• LYFT – 55.22% Gain: Buy to Close 1 Contract (or 50% of your Contracts) April 14th $9 Put @ $0.30 Debit. DailyPlay Portfolio: By Closing 1 of the 2 Contracts, we will be paying $30. 

Investment Rationale

Bulls controlled yesterday’s open and the morning, but bears took over the rest of the day, and the SPX only recovered 12 of Wednesday’s 65-point loss. Even more importantly, it closed some 60 points beneath the intraday high made in the morning – still suggesting that the market may see a pullback here while also potentially remaining within the larger trading range of 3864 to 4148. QQQ opened just beneath $310 and quickly got to $314+, but then actually closed just beneath its opening price, marking a daily doji and putting in a second top in as many days right near $315. (As a side note, traders are twice as bullish the NDX as they are the SPX (50% bulls vs. 26% bulls, respectively. What a huge change from last year.)

In my opinion, the bonds and the dollar are still the big keys to what the next bigger move comes for equities. Right now, the US Dollar Index is just tucking beneath its weekly cloud, and absent a rebound today, it’s looking more like its 2023 low near 100.5 can be tested. I also remain in the camp that bond yields will move southward to mark new 2023 lows beneath 3.33% (and at least trade down to 3.25% to 3.10%). I don’t see them getting back above their breakdown level of 3.80% from two weeks ago – certainly not in this phase of their pullback from the 4.09% island reversal high made on March 2nd.

Let’s make a couple of adjustments in our open positions:

1. If ADM is not above $76.93 near today’s close, let’s look to exit 5 of the 14 short $77.5/$75 put spreads we have on.
2. Let’s buy back 1 of 2 LYFT short $9 puts today.

I am headed out of town today and will be in the air back to NY on Monday morning during our weekly market outlook webinar. Tony or Prakash will be filling in for me.