DailyPlay – Portfolio Review – July 19, 2024

DailyPlay Portfolio Review

Investment Rationale

The VIX closed above the 16 handle yesterday and technology has led this market lower. Many of you are asking if this is the start of a larger pullback or another opportunity to buy the dip. Based on what I’m seeing, my view is that it’s more likely a buy the dip type selloff and we are very much at a level where this could start to reverse back higher. We continue to see the RSP equal weight S&P remain very close to all-time highs. The swaps market is now pricing in 3 rate cuts for 2024, and the 10-year yields remain below 4.2%. The lack of participation that we highlighted over the past 7 months have reversed to a degree that we have never seen before. The Equal Weight S&P 500 has confirmed the current bullish trend. We’ve seen a healthy amount of sector rotation with flow out of Tech, Energy and Communications and flow into Discretionary, Materials, Industrials, Financials, Real Estate and Utilities. If this trend continues, we have a far healthier equity market rally with broader participation. Earnings reflect our largest risk at the moment and we will see a lot more by next week. Our DailyPlay Portfolio has a lot of long exposure which is why we are not adding further exposure on this buy the dip opportunity, and simply monitor our existing positions for exit opportunities.  

Our Trades

AZN – 28 DTE

Bullish Credit Spread – $78 support has held so far, which supports our bullish thesis, with 28 days left, we will continue to hold this position. 

GOOGL – 42 DTE

Bullish Credit Spread – Next level of support is $172, however, oversold conditions suggests a bounce is likely from here. 

LULU – 28 DTE

Bullish Debit Spread – Our counter trend position requires LULU to stay above $282, a break below that would warrant cutting losses. 

MS – 21 DTE

Bullish Credit Spread – We’re looking for $104 to hold, we have already taken profits on MS twice and now looking to at least break even on the last trade. 

PYPL – 14 DTE

Bullish Credit Spread – The chart continues to look more constructive as it makes higher highs, we’ll monitor to see if the $60 support level holds this week. 

TSM – 35 DTE

Bullish Credit Spread – With 35 days left to go and stop loss levels have not been triggered, we have the opportunity to continue holding this position and look for a bounce in semis.