The SPY is reclaiming the 100 day right now on the eve of midterms. Where we close today will be very important bulls would like to see a close over 759.58 and the start of building over the 100 day. I don’t think anyone has any clue what happens this week with midterms and Iran. There is so much that can go really wrong. If democrats win what does that mean for the datacenter trade, which is the entire market at the moment, with a key part of their platform involving blocking the construction of new ones. What does that do for all these companies modeling countless new datacenters? What happens if Trump starts bombing Iran again and oil spikes? The charts are not exactly bullish right here and I know everyone is always a contrarian but there is a ton that can go wrong this week. I would say just wait and see, caution is very much warranted. That doesn’t mean close everything, it means don’t be reckless with leverage and high beta names that is all.
The QQQ, below, looks even worse with the 8 and 21 sloping down and now 3 closes under the 100 day in a row and 9 in the last 12 sessions. That is alot of weakness unfolding in tech and perhaps it gets people to see that there are other sectors out there. If you’re adding to longs under the 100 day you’re basically committing to a longer term trade, in the short term it will just be a tough trade with alot of big swings. Will they save tech stocks? Sure they always do, they’re our entire market but it won’t be a smooth ride until they’re back over this cluster of moving averages overhead.
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My Open Book
Today is an interesting session. I’m up nearly 7% on my trading book and really outperforming the market with WYNN and MGM both up huge. When I put these trades on in size over the last month it looked nuts on the surface. Everyone was long ai names and I had just closed my INTC 60/80 call spread for a 95% gain and had a ton of cash to deploy somewhere. I chose the casinos because they seemed egregiously undervalued and something worthy of deploying cash into considering WYNN was trading below the value of its assets and MGM was down below $30 after a failed buyout at 48.50. This is where patience is rewarded, it took a few weeks but eventually the names recovered and things look great now. People want results right away all the time, sometimes trades take time, don’t overthink things. If you believe in your thesis and the charts are building constructively, don’t second guess yourself. Trading is a psychological battle and you’re constantly questioning yourself. You have to be flexible if you’re going to be a good trader, you can’t stick to the consensus names. The tech trade was not where I wanted to be ever since the QQQ broke down 2 weeks back and I stuck to that. Think about the big picture and the bigger move you want to be part of and focus on that. I still have tons of short puts on tech lower but I didn’t deploy any cash into commons and I think it is save to say with the move over the last week with both MGM and WYNN up over 10% while the nasdaq got hit, that was the right move now.
