1/15, Best Idea For The Week Ahead

Before I get into my best idea for this week and some other charts/scans. I want to say that these last 2 weeks have been maybe the most incredible start to a year I’ve ever had and it was not only unexpected but I also don’t anticipate replicating anything like my performance the last 2 weeks again. As I’ve always stated my objective is to always outperform the market but as a put seller, mostly, my goal is simply to generate 1%/week. I’m already up almost 19% in 9 sessions this year. That is beyond anything I ever expected. All of you knew I came into the year levered up a bit into short puts looking for mostly nothing but a slow chop and my puts to decay, instead the market has rallied and my portfolio has exploded.

On a longer term basis, going back to day 1 of this substack, I’m now outperforming the Nasdaq by 75% in the last 7 months.

Now while someone like say an oil bull may have done the same, I did it while mostly trading tech names as they were in the bottoming process. My whole gameplan was to find the most beaten down sectors/oversold names and attack those. For the last few months that has been small cap tech and tech in general, and these are longer term trends so that is how I positioned my trading book.

As of friday’s close, the breakout in small caps is on, look at this chart of the IWM below, we finally got a weekly close over the downtrend line, the SPY hasn’t done this yet, and that finally confirmed my bullish bias for weeks that small caps were in a bottoming process.

Trends are made over long periods of time, you have to ride the wave of a sector as it is bottoming. You will question yourself, you will have people question you, but if you stick to the charts and options flows, you will objectively see the truth, regardless of your bias. Look how everyone was bearish coming into the year and while they were right about the economy, as I’ve said, none of that matters. Could equities reverse here? It’s possible, but believe it or not all the indicators on breadth, the breakout in small caps,etc tell us that it is possible we are in a bull market again. That is with every awful piece of economic data we receive. The SPY weekly chart, below, is at the downtrend line after forming a higher low. This could confirm a return to a bull market this week, or it could reject and go lower again. We will have to wait and see, but for now small caps lead the way.

This Week’s Best Idea

Last week worked out nicely with Shopify, the name had a little scared when Amazon announced “Buy With Prime” but it closed friday very strongly up almost 6% and ended up having a very nice week. I still like it longer term for put selling much lower.

For this week I had a hard time coming to a conclusion on which name I wanted to go with because there are alot, but I actually went with a large cap name that has had an incredible start to 2023 and the options flows are extremely bullish along with a nice technical breakout that is underway.

Take a look at the chart and take a guess before I show you the plethora of bullish options trades that have gone off recently……..