11/3 Best Idea For The Week Ahead

This week’s best idea is a name that has seen repeated insider buying along with an immense amount of upside call buying targeting 5-6 months out. It is a smaller near $7B company and I think it has alot of upside potential based on the money flow going on here. It reminds me alot of when I went long FOUR this summer as it kept dumping yet seeing continual buys by the CEO combined with upside calls and FOUR is up 75% since the July lows. I drew up a risk reversal that could potentially return 100x or more your outlay if the repeated upside call flow I noted works out. Before we get into it though let’s talk about the market and where we stand now.

We wrapped up friday with a very ugly candle on the SPY. We tested higher, not even into the 21 ema from the underside and fully reversed and closed lower than we opened. Remember the /NQ was up 200 at one point friday after the big Amazon report but the overall market did not care and sold off all day long. Could it be people taking profit before the election in 2 days and potential chaos? Sure most are up huge this year and risking it into a big unknown isn’t worth it. In general all I can say is the actual election isn’t that important to the market. Who wins or loses isn’t going to change much, equities have gone up and to the right for the last century plus. This short term move is simply a massive bearish divergence that formed long ago playing out. We’re firmly in a downtrend now, until we’re not. Could it be over Wednesday on a huge gap up post election? Sure, just let the charts guide you, just wait for a close back over that 21 ema and then start to layer into longs. Doing so here below the 21 is just asking for headaches. You won’t miss that much by just being patient.

We also had our first weekly close below the 8 ema in 2 months. Another caution signal, so going into this week, I would say unless you’re looking to add long term positions and the short term is not important to you.