QQQ Conditional Bullish Opening Trades

View QQQ Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 2 Contracts Dec. 16th $272/$292 Call Vertical Spreads @ $11.82 Debit.

Total Risk: This trade has a max risk of $2,364 (2 Contracts x $1,182).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Neutral

Technical Score: 5/10

OptionsPlay Score: 85

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF between today and Wednesday the Qs sell down to within 25 cents on either side of $273.22. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid until Wednesday this week.

Investment Rationale

I’m clearly no bull, but I don’t mind tactically playing the long side if a name pulls back to where I’d be a willing buyer. So, let’s look at the daily QQQ chart, which last week stalled against one of two downtrend lines that can be drawn from the all-time high.

QQQ – Daily

Note the bearish Propulsion Momentum level is at $273.22 this week. Thus, if between today and Wednesday the Qs sell down to within 25 cents on either side of that number, we’ll then look to buy a Dec. 16th $272/$292 call spread for the then-current bid/offer mid-price.

Partial Closing trade

• CNC-96.84% Gain:  Buy to Close 4 Contracts Nov. 18th $75/$72.50 Put Verticals @ $0.95 Debit. DailyPlay Portfolio: By Closing the remaining 4 of 8 Contracts, we will be paying $380. We partially closed this trade on November 2 with 4 Contracts at a $0.05 Debit. Our average gain for this trade is therefore 95.79% and our average cost basis to exit this trade is $0.50 Debit.

Investment Rationale

Stocks took a breather yesterday, despite lower rates and a lower dollar.  Target’s (TGT) warning of slower things to come put pressure on the broad market, even though Lowes’ CEO said he doesn’t see any sense of slowing. SF Fed President Mary Daly also commented saying that there is no Fed pivot even being discussed, so that probably kept a lid on buyers coming in on Wednesday.

Yesterday’s decline still posted a daily SPX Setup +7 count (towards a +9), though the Countdown remained on a +10 (towards a +13). That would still indicate that we are nearing a potential trading top – possibly even by sometime next week.

SPX – Daily

We still have on the CNC Nov. 18^th short $75/$72.5 put spread, up 97% on this remaining portion. With it expiring Friday, let’s exit the balance today.

LOW Conditional Bullish Opening Trades

We list the two Conditional trades for LOW separately.

View LOW Conditional (1) Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 1 Contract Dec. 9th $200/$190 Put Vertical Spreads @ $2.43 Credit.

Total Risk: TThis trade has a max risk of $757 (1 Contract x $757).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 89

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF we see LOW trading down near $200. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

View LOW Conditional (2) Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 3 Contracts Dec. 9th $195/$190 Put Vertical Spreads @ $1.08 Credit.

Total Risk: This trade has a max risk of $1,176 (3 Contracts x $392).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 93

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF we see LOW trading down to $195. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

A better than expected PPI number again gave bulls a reason to buy stocks, with the SPX gaining another 34 pts. on Tuesday to 3992, its highest close since early September. Nine of eleven macro sectors were up, led by Communication Services and Consumer Discretionary names. (Almost half of these combined sector weightings come from just 4 stocks: META, GOOGL, AMZN, and TSLA).

I disagree with those who think that we’ve started a whole new bull market.  In my opinion, the Fed will not pivot; 2023 earnings estimates still need to decline; recession is still a distinct possibility, and the general trend remains lower.  In fact, when I look at the daily SPX chart, I see a Setup +6 and a Countdown +11, suggesting that by week’s end we could already be starting to top this move out. Also note the daily TDST line at 4110 and the most recent Propulsion Full Exhaustion target at 4118 – both potential resistance trading targets, too.

SPX – Daily

Lowes (LOW) reports today before the open, and will hold its conference call at 9am ET. So by the open, we should get a pretty good sense of initial reactions to the data and guidance. Looking at its chart, and what Tony identified as decent fundamentals for it in yesterday’s webinar, I think we could see the $200 to $195 area tested on a pullback. Given the recent low volume near that price, should we see LOW trading down near $200 today, let’s look to sell a Dec. 9th $200/$190 put spread (on half the amount of exposure we normally do) for whatever the current bid/offer mid price is on the spread at the time. Should it get down to near $195, we’ll put on the other half of the trade by selling a Dec. 9th $195/$190 put spread for whatever the then current bid/offer mid price is at the time. So, two potential sales of put spreads (to possibly enter during the balance of the week) to equal the total exposure you’d normally put on for one option spread trade IF and only if we see a decent pullback.

LOW – Weekly

GLD Conditional Bullish Opening Trade

View GLD Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 5 Contracts Dec. 16th $160/$155 Put Vertical Spreads @ $0.74 Credit.

Total Risk: This trade has a max risk of $2,130 (5 Contracts x $426).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 6/10

OptionsPlay Score: 107

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF GLD sells down to $161.50 to $160. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

Stocks were holding recent gains through much of yesterday’s trading, but a late sell-off fueled by Amazon announcing layoffs sent the SPX down some 36 points, virtually on the low of the session. But after the close, the Berkshire Hathaway newest holdings file was released, showing a $4B investment in Taiwan Semiconductor amongst others, helping push futures higher to get back about 1/3 of what they lost yesterday (as of Monday night as I write this).

Running multiple scans yesterday that I do to come up with potential new Daily Play trade ideas yielded no help, as the price is beneath levels I really want to sell at, and are higher than support levels. Thus, we will be patient and look for opportunities that may present themselves to us if they appear at our preferred price. 

One such idea is to look for a pullback in gold (via the GLD ETF). Yesterday, we saw the cloud’s Lagging Line close right on the top of its cloud, perhaps giving an indication that it can pull back after the $100+ rally that spot gold has made in the past week. Looking at where the daily cloud top shows up for the current price (just north of $160), along with the volume distribution over the last month (shown with horizontal bars on the right side of the chart), should we see the GLD sell down to $161.50 to $160, we’ll sell the Dec. 16th $160/$155 put spread for the then bid/offer mid-price, looking for gold to bottom there and turn back higher. THIS IS A CONDITIONAL TRADE DEPENDING UPON UPCOMING PRICE ACTION AND MAY NOT BE EXECUTED.

GLD – Daily

Partial Closing trade

• VALE -115.63% Gain: Sell to Close 10 Contracts Dec. 2nd $13.50/$15.50 Call Vertical Spreads @ $0.64 Credit. DailyPlay Portfolio: By Closing 10 of the original 20 Contracts, we will be receiving $640. 

IEF Conditional Bullish Opening Trade

View IEF Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 12 Contracts Dec. 16th $95/$93 Put Vertical Spreads @ $0.47 Credit.

Total Risk: This trade has a max risk of $1,836 (12 Contracts x $153).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Neutral

Technical Score: 3/10

OptionsPlay Score: 86

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF the TNX rallies to the 3.97% to 4.01% range anytime this week. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

UST 10-yr. rates will adjust today to include what would have been Friday’s move, given the fixed income market was closed then for Veteran’s Day. Last week’s large downdraft in yields did break key support at 3.94%, but they also stopped at one (3.80%) of two downside targets I highlight in today’s weekly webinar.

Since they are trading very technically, let’s look to take advantage of a potential rate rise sometime this week back to ~4%, where I note first level resistance now lies. So, as a conditional trade, let’s look to sell an IEF (that’s the ETF that most closely inversely tracks the TNX’s direction) Dec.16th $95/$93 put spread when/if the TNX rallies to the 3.97% to 4.01% range (anytime this week) at what is then its mid bid/offer spread price. Bond bulls should be supporting the ETF in that $2 zone on a pullback.

IEF – Daily

Our conditional bullish call spread recommendation in VALE was entered on last Thursday’s decline, when we were able to buy the Dec. 2nd $13.50/$15.50 call spread at 64 cents when the stock got into our $13.75 to $13.50 bidding zone. On Friday, the stock closed at $15.45 (with a high of $15.53), and the spread has already doubled in value. Let’s take half off today.

LEN Conditional Bullish Opening Trade

View LEN Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 5 Contracts Dec. 16th $82.50/$77.50 Put Vertical Spreads @ $1.10 Credit.

Total Risk: This trade has a max risk of $1,950 (5 Contracts x $390).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Bullish

Technical Score: 9/10

OptionsPlay Score: 89

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is If we see a decline to that $84.26 to $81.62 zone. Also note that the cost basis, premium received, as well as the number of contracts when we open this trade will therefore be different from what we post today.

Investment Rationale

Stocks ripped higher, yesterday, while bond rates and the dollar fell sharply, all on the heels of a less than expected inflation number. Ms chased all day long to buy – whether covering shorts or getting long – but was it too much too soon on a single piece of data?

We know that this time of year is a particularly favorable period for stocks (i.e., Nov. thru Apr.), and that the mid-term elections is usually a sweet spot for investing. Now this CPI figure gave bulls everything they wanted to see to believe that the market will rally into year’s end.

Before I jump to that conclusion, let’s see what transpires over the next week. The dollar (DXY), which I have recently been bearish to sell down to 108 to 105.50, is nearing that higher number. Here’s a PPI number out next week that would need to confirm lower levels, or that could put a real damper on the bull party, too. And, heck, inflation is still running at 7.7% — hardly a victory for Americans.

I suspect the Fed will raise rates 50 bps. in December, and with all 6 of Fed governors yesterday making public speeches that did not give bulls anything new to celebrate, let’s not get too enthusiastic about a Fed pivot occurring. (I still don’t think it likely, regardless of yesterday’s inflation number.)

Given the massive upmove yesterday, I can look to buy stocks on a pullback over the next week or so. One name to consider in the homebuilder space (a potential beneficiary of lower rates) is Lennar (LEN), which like practically every name yesterday gapped significantly higher. But I’d be inclined to be a buyer in it on a pullback to that overnight gap area anytime in the next week or so. If we see a decline to that $84.26 to $81.62 zone, we’ll then sell a Dec. 16th $82.5/$77.5 put spread at whatever the then current bid/offer mid-price is.

LEN – Daily

Lastly, yesterday we were able to get into the VALE trade idea I put out earlier this week, looking for bullish entry if we saw the stock get down to the $13.75 to $13.50 zone, which it did yesterday with a low of $13.64. Thus, we were able to get long the Dec. 2nd $13.50/$15.50 call spread for about 64 cents.

Please hold off on entering the DailyPlay trade on ETSY, as recommended in our DailyPlay email of today, as ESTY is about to open 5% higher today. We will inform you when the timing is right to enter this trade.

NEM Conditional Bullish Opening Trade

View NEM Trade

Strategy Details

Strategy: Short Put Vertical Spread

Direction: Bullish

Details: Sell to Open 10 Contracts Dec. 2nd $43/$40 Put Vertical Spreads @ $0.94 Credit.

Total Risk: This trade has a max risk of $2.060 (10 Contracts x $206).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a neutral to bullish trend.

1M/6M Trends: Bullish/Neutral

Technical Score: 2/10

OptionsPlay Score: 90

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF we see a decline to $43–$42.75 anytime this week. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

Stocks edged higher into Election Day, as many think that Republicans taking at least of 1 of 2 houses (if not both) will lead to a halt to any early-discussed upcoming legislation that could put a damper on the tech and/or energy sectors. Historically, this is a favorable time for the equity market in the mid-term presidential cycle, and of course, you already know that the November to May period is a far stronger one than the May to October time frame.

I write this early enough on Tuesday night to not have any sense of how elections will pan out, or for how investors will take the results going forward.  As I’ve previously said, I believe the House will be won by the Republicans, and I’m not sure about the Senate, but if I had to pick side, I’d say they also end up netting one new Senator in order to take that chamber, too. And what that basically means, is that President Biden won’t likely be able to get any new legislation passed in his final two years of his presidency.

Marketwise, yesterday we saw the popular gold miner Newmont Goldcorp (NEM) continue higher to its best daily close in a month. Given the spike bottom reversal we saw in it, I think we get a move that reaches up to the Propulsion Exhaustion levels (i.e., the blue upward pointed triangle lines) at $47.73 and $48.00. I suspect we’ll have a chance this week to buy NEM on a pullback, especially with yesterday reaching the most recent TDST resistance line (the horizontal dotted blue line) at Tuesday’s high. So, if we see a decline to $43–$42.75 anytime this week, let’s look to sell a Dec. 2nd $43/$40 put spread for what the then current bid/offer mid-price is trading for.

NEM – Daily

Closing Trade

• AIG-96.43% Loss: Buy to Close 6 Contracts Nov. 18 $54/$58 Call Verticals @ $1.68 Debit. DailyPlay Portfolio: By Closing the remaining 6 of 9 Contracts, we will be paying $1,512. We partially closed this trade on November 2 with 3 Contracts at a $2.42 Debit. Our average loss for this trade is therefore 78.97% and our average cost basis to exit this trade is $1.93 Debit.

Investment Rationale

After a back and forth session, bulls took control late in the day and again pushed the market higher – just as they had on Friday. The bullish move off of a failed potential bearish Propulsion Momentum level touch (at SPX 3703 last week) continued, with the index now some 100 pts. higher than there, while also 100 pts. below last week’s high. 

If today weren’t Election Day – and I have no idea how results are going to affect the market tomorrow or going forward – I’d say that the bounce could potentially take the market back up to near last week’s high. And maybe it will go there anyway, but let’s see what Wednesday’s move pans out to be. Bulls are certainly feeling more emboldened, with the rough double-bottom from June and October, along with the lows made right at the 200-WMA.

So, yes, bulls have reason to believe a bottom is in. And I don’t disagree; it seems like there’s enough to think that we have one given what we’ve seen since the October low. However, note that rates have not pulled back at all, and the UST 10-yr. closed yesterday just two bps. beneath the highest close of the year. If they break to new highs and then stay above 4.3%, I think it highly unlikely that the equity market can hold up. If analyst’s lower forward earnings numbers as I expect them to need do, I think it highly unlikely that the equity market can hold up.  And if inflation doesn’t materially pullback anytime soon – which I suspect it won’t – I think it unlikely that the equity market can hold up.

So, let the bulls have their fun for now. As far as I’m concerned, it remains a rally in a bear market.

I want to exit the AIG bearish Nov. 18^th $54/$58 call spread we have on, as it closed above its Propulsion Exhaustion level at $58.39 that I said I would use as the stop on this trade (as well as why I chose the $58 hedge strike in the first place).

VALE Conditional Bullish Opening Trade

View VALE Trade

Strategy Details

Strategy: Long Call Vertical Spread

Direction: Bullish

Details: Buy to Open 20 Contracts Dec. 2nd $13.50/$15.50 Call Vertical Spread @ $0.96 Debit.

Total Risk: This trade has a max risk of $1,920 (20 Contracts x $96).

Trend Continuation Signal: This is a Bullish trade on a stock that is experiencing a bullish trend.

1M/6M Trends: Bullish/Mildly Bullish

Technical Score: 7/10

OptionsPlay Score: 95

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Please note that this is a CONDITIONAL trade. We will only enter the trade when the condition is met, which is IF the stock pulls back to the $13.75 – $13.50 area. Also note that the cost basis, premium paid, as well as the number of contracts when we open this trade will therefore be different from what we post today. This condition is only valid for this week.

Investment Rationale

Equities had a good Friday rally, but still had a horrible week. What had a good Friday and a good week were metals stocks, as dollar weakness and prior non-breakdowns in gold and copper finally took a toll on those recently positioned short.

One name that I like in the copper space is VALE. It has side-by-side daily Sequential -13s in July and September and last week came back down to bounce on its uptrend line (in purple) and also backfilled against the downtrend line (in green) that it had broken out above in early-October.

As such, let’s look to buy a VALE Dec. 2nd $13.50/$15.50 call spread anytime this week IF the stock pulls back to the $13.75 – $13.50 area. Then, and only then, will we look to buy that spread at the then current mid-price.

VALE – Daily