5/9 Recap

We opened today with more jobless claims than we’ve seen in months and that of course meant buy everything to start getting infront of the fed before they start cutting rates. Bad news is good news in this bizzaro world as recessionary data means we can start to see lower rates and adjusted DCF models. Meanwhile, growth names continued their pattern this earnings season of getting crushed on anything they report with ABNB down 7% and RBLX down over 20%.

On another note, as I mentioned the other day, a flurry of calls recently were looking for Amazon to top 190 soon and sure enough Amazon broke out to new all time highs today rising over 191.50 as I type this on news AWS is accelerating faster than most are looking for while retail continues to surprise. This has been a fairly smooth ride since I entered these leaps last May regardless of how it has felt along the way, it isn’t often you catch one of the best names in the market rising straight up 65% in under 12 months, next week will be 12 months for me in this trade. Still, I know alot of you came along for the ride, this is everything we’ve been waiting for, the multi year base breakout. Everything we’ve made to this point is fantastic, but now the fun should begin. This breakout has been a long time coming as Amazon begins to harvest its massive capex cycle, I’d like to see a weekly candle close over 190 tomorrow for confirmation first, but today was the first time Amazon has ever seen these levels. If you’re a long term holder, moving to a new range after 3 years is a very big deal. Let’s see how tomorrow closes before we get too excited, false breakouts have been the norm here but this was a very exciting step.

One more thing before I get into today’s market recap, so there was this massive trade on Amazon today you’re going to see alot of people on Twitter discussing. You can see the actual trade below, someone closed up 60,000 calls in June at 160 and it says “bidside” 77,000 calls in September at 175 with the OI at 3189. Now most of these automated options services will read the feed below and automatically say that it is bearish because it was placed on the bidside, but here is where a human who knows what he’s looking at can’t be replaced yet. There is no sane person who would sell $20 in the money calls on a multi year breakout. You’d be suicidal doing that, so those calls were actually bought today on a rollup from the June calls which closed at the same time. So it is important to understand just because one of these countless options platforms says a trade is bullish or bearish, it doesn’t have to be the case, each trade is a case by case basis and I try my best to look at each trade to get it right before logging it in my table you see everyday. Sometimes you have to use your brain to deduce that if someone actually sold 77,000 calls there, they could wind up homeless if Amazon goes up another $20 by then.

The SPY continues onwards nicely above the rising 8 ema, I expect we see a pullback to it in the next day or 2, how it reacts there is what matters most. As long as we’re riding the 8 and 21 ema higher, there is nothing to be worried about, only when we go below those do you start to get concerned.

Recent Trades

Let’s start with APP from yesterday’s recap, those 4 big put sales that came right before earnings were on the money, APP is up 18% today to 87.50. Again I’ve always told you all that in the table I post everyday, the put sales are in my opinion the most important part of the whole recap. To me, those are the sharpest players in the market and they know what levels they want to go long at. It took alot of guts to sell all those puts into an ER on a small cap when every small cap seemingly got crushed this season, but not this one, they were all over it.

FOUR is one of the few positions I hold along in my trading book and it had a nice reversal on earnings today. It is putting a massive bullish engulfing candle as we speak on these words below from their earnings release this morning. The same thing I told you the day I bought it a month ago, the company thinks they’re undervalued, the bids over $90 were not enough and they seek more. What the stock does week to week, I don’t know, but it is a very mispriced asset that I am holding till when ever it decides to be valued appropriately.

FOUR got an upgrade to $100/share today after that print and it still sits at $61, there is alot left here when small caps recover.

Trends

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Today’s Unusual Options Activity

Here is today’s link to the database, as always it expires tomorrow morning at the open and I will have the rest of today’s action added in as the day goes on so check back on the link to see all the updated trades. It’s been a pretty slow session thus far.