10/31 Recap

Ugly day, I sent out a note in the premarket to you all here if you didn’t read it. We were breaking down below the 21 ema this morning around 576 on the SPY and I wanted to let you all know that it wasn’t looking good for the market. It does indeed appear that we will be closing below and breaking trend. You can see the 8 ema close to crossing the 21 that is a bearish crossover and for the 3rd time in a few months it appears we are losing that uptrend. This is the unfolding of the bearish divergence I’ve been referencing in the last few recaps. It’s nothing crazy, yet, it may not be a big selloff but we need the market to hold the recent breakout over 565 or we’ve got bigger issues then. As I’ve said many times and more in depth in the morning note, this is where you remove lots of things and you will avoid alot of pain. No market has ever sold off and remained over the 21 ema, so unless you’re in a position for the long haul, this is where you want to remove the lower conviction positions and just wait until we reclaim the 21 ema starting a new uptrend. Could this be a massive headfake before Apple and Amazon report and NFP tomorrow? Sure, but you have to respect the warning signs the price action is giving you and this is the first day we likely close below that key 21 ema.

What does a market mean downturn like this mean? It usually means big tech is weak, since big tech is the bulk of market weighting. Today you’re seeing MSFT and META down big, those are 10% of the market. You see defensive things like healthcare, cigarettes, etc work. It’s not the end of the world these periods are usually fairly short lived as a whole.

Recent Trades

SW - I highlighted this one on 9/18 here it was just below 48 and up 10% now north of 52 those January 50/60 call spreads are now in the money. Another packaging name IP was up huge today in the space up 13%.

But it was ugly for a bit, you can see the move down from 48.xx that day to 43 over the next month, but the last 2 sessions it has blasted off to 52+. The date of the call spreads was January and it took time but the player was dead on with the trade. So don’t give up on a longer dated trade because it has a rough few weeks, these trades are placed with many factors in mind, sometimes you just have to let them play out to the date because they don’t always work right away.

Today’s Unusual Options Activity

Here it today’s link to the database, it will be open until tomorrow morning at the open, the rest of today’s trades will be added by this afternoon. Pretty slow session as you’ll see in the table below, makes sense with the market breaking down you’re not going to have many call buyers stepping in. As for the highlighted trades I don’t have 5 today because I just didn’t find 5 that interested me enough, again we’re breaking down today, now isn’t time to be a hero to the long side, it’s been a great year to this point, being reckless right now is silly.