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To the naked eye, today's market opening didn’t feel unusual… |
Both the S&P 500 and Nasdaq futures were relatively unchanged. |
However, there is potential danger lurking. |
And it all has to do with what’s happening in the bond market. |
Not only did bond futures outpace ES futures in volume this morning… |
They’ve also been dropping sharply over the past few trading sessions. |
My early take is that after the Presidential debate, the market is beginning to price in a Trump win…which appears to be INFLATIONARY. |
With interest rates rocking to the upside…I expect to see tech stocks come under heavy pressure. |
That said…I wouldn’t go into full bear mode yet. |
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Nvidia has led tech all year…and while it has pulled back from its highs a few weeks ago…it’s still trading within its expected range. |
There are two things I’m watching with Nvidia. |
First, it’s the options flow: |
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What am I looking at? |
Are traders selling calls (hitting the bid) and buying puts (hitting the ask)? |
Early this morning that’s what we were seeing…but as the session progressed the options flow started to balance out. |
Nvidia right now is consolidating until we start to change the options flow. |
Second, take a look at the expected move in Nvidia. |
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It has more or less traded within its expected range. For a breakdown to occur it needs to close below the lower edge of the expected move for a few sessions. |
Something we haven’t seen yet. |
Onward and upwards… |
We only have 3.5 trading days this week. |
However, the expected move for the SPX is approximately 59 points. Now, you might be thinking, but isn’t it less than last week’s 65. |
It is…but last week we had five trading days. So we’re actually expected to have more volatility this week on a daily average…kind of strange for a holiday week. |
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I wouldn’t be surprised if he hit both sides of the expected range (upper and lower edges) this week. |
What can I say…the action lately has been slop-tastic. |
Sure…the advanced decline is rising…but to me that just indicates a rotation out of tech. And while that’s healthy…the issue is that the largest components of the indices are tech…which could push the market lower. |
Financials are trading beautifully at the moment…but it’s hard to put a trade in the sector with earnings around the corner. |
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Elon got his pay package and now Tesla shareholders are getting paid. |
Shares of Tesla are trading comfortably above $200 for the first time since early March. |
The company is set to issue delivery numbers tomorrow…but today’s action implies they’ll be good and are being front run. |
I was able to get a piece of the move in my Catapult Alerts Portfolio. |
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I’ll be going live tomorrow to talk about what’s next in the portfolio… |
If you have any questions about how it works give my team a call at 623-244-5567. |
In my opinion, utilizing this strategy is the most cost effective way to trade high-dollar stocks. |
Not only that, but it can dramatically shift the risk-to-reward in your favor. |
Onward and upwards… |
While Tesla is raging…Chewy Inc. is getting smoked. |
The man they call Roaring Kitty announced he was taking a 9 million share stake in the company. |
And while he made a fortune trading Gamestop…I don’t think this will end well for him. |
The market mechanism is just too efficient to let it happen. And as you can see from today’s price action…Chewy is getting chewed up and spit out. |
I’m also watching for further weakness in the housing market. Which could spell out bad news for companies like Home Depot, Lowes, and Pulte Group. |
There’s lots of stuff to watch this week and I’ll be sharing more of my insights with you tomorrow. |
If you haven’t signed up for my next Catapult Alert you can do so here. |
You can also sign up and get any questions answered by calling 623-244-5567. |
Subscribers will get to see me live tomorrow. |
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To your success, |
Don Kaufman |
