10/30/2020 Daily Market Edge - members only

Careful of the late dip into the close. Traders might want to de-risk into the weekend and next week.
Earnings notes:
1) Reactions on the headline have nothing to do with the quality of the reports. It's all about expectations.
2) Small dips in great stocks like AMZN FB are not big enough to act now into election. (AAPL maybe if closer to 103/105 would be attractive)
3) The overnight dip was big so I respect that today and they could repeat the process into the close ahead of the weekend.
So..... Don't be a hero and don't panic out either. Once this mess abates the fundamentals will rule again.
For now, investors (you and me) have a lot on our minds. Just look around you. I am already thinking about how my trip to vote will go, If I have enough paper towels, if I stocked up on enough food and gas in case someone does something stupid.
These are uncertain times so we should be patient regardless of conviction levels.

Averaging down:
I don't do it too close to the last purchase. I need the difference in price to be big and for time to have passed too.

Now... let's look at some charts:

> S&P (e-mini):
We have 2 bearish patterns in progress. They started once we lost 3280. chart
> Nasdaq:
> The DOW:
Our downside target met. I will buy the dip on further dips (see chart) chart
> Small Caps:
> Comment:
Markets corrected overnight and bounced. Iffy day so no new risk for me.

I HAVE PROTECTION! Simple December calls in VIX VXX. Or spy debit puts or put spreads. Treat it like home insurance. You can always change your mind next week about it.

Earnings companies:
AAPL (earnings): Earnings were okay and investors looking for whatever reason to sell. I want to remind us that the immediate reaction to earnings is not about the results. It's about the expectations. It has support through 103. Anything lower and I will go long for sure. chart

>AMZN (earnings): They CRUSHED earnings. They tripled net income from last year. The idiot experts in the media are complaining that AWS growth fell to 29%. Is that a joke? They forget that the point is for them to make money not matter from what segment. AMZN is crushing it on all metrics. WOW this report shows what a beast it is. Having said that, long term is fine and small dip during a huge market uncertainty week is fine. I will catch the falling knife if and when it comes. This mini dip is not reason for me yet. Follow the arrows on chart. chart

>FB (earnings): Like AMZN, FB earnings were very strong. The pundits can nitpick it all they want. This stock is healthy and will be leading markets out of this election tizzy. I stay long it and I will buy dips when they come. -1.5% isn't big enough to act now. Follow lines on chart chart

>GOOGL (earnings): Surprised everyone with very strong numbers and someone of an upbeat tone. They don't usually do that and stock is up. Expectations were mediocre so up they go. Too high for my taste. chart

>SBUX (earnings): Okay report. Stock too high here given the risks. If long I can stay long but dip is not enticing yet. Follow the lines on the chart chart

Posted to Create Income with Options … on Oct 30, 2020 — 8:10 AM

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