8/9 Recap

The market sold off hard today before CPI tomorrow and PPI Friday. The megacap names are really weighing on this market now. That rotation I mentioned a few weeks back out of big tech is finally playing out, I still do think a few of those names that reported outsized quarters are fine, but in general, the buy every tech name everyday trade is over. You’re really seeing the pain in the small cap growth names as so many are getting hammered on their earnings. Even ARKK is down almost 15% in a week.

The SPY is still caught below this convergence of moving averages, but it remains weak going for it’s 6th straight close below the 8 ema. You can see the weakness from the start of August when the macd rolled over. Again, nothing crazy, the RSI was off the charts for 2-3 weeks in July and we got a little cooling off.

Tech stocks look worse than the market the QQQ below is in a freewill with nothing between it at these levels and 350. Today we filled that gap you can see from early July, maybe tomorrow if CPI comes in cooler than expected this can get a big push higher. Otherwise that rotation from tech and the XLK into the defensive XLV/XLU/XLE type sectors continues to play out.

Speaking of XLE, oil has been unstoppable. The chart below isn’t a SAAS stock, it is crude oil and it has gone up over 20% in a little over a month. How will this play into future CPI reports, probably not well, but in tomorrow’s report the numbers won’t be horrible. This has to be a cause of concern for everyone who has been saying inflation is dead for a while now.

Trends

Seeing alot of China names in the 2 week trends. BABA and KWEB are two of the top 3 names. China is in deflation now so you have to believe stimulus will be right around the corner. DIS saw alot of calls bought today before it reports, the huge trade I noted below in the money with over 9000 bought stood out to me as something of note with that much risk being put on before the report.

Week To Date

2 Week

1 Month

Today’s Unusual Options Flow

117 Trades Today

The one that stood out to me was PENN. I noted it in yesterday’s recap. I had not noted anything there for months and sure enough, right after the bell we got announcement of their deal with ESPN and while PENN did hit 29+ today it is sitting right at 27 now which is where the max gain on this trade would be. Nice play by whoever put it on.