9/29 Best Idea For The Week Ahead

The SPY had another all time high weekly close Friday. This has been one giant uptrend since it began last October, there have been headfakes along the way but not 1 time did we close below the 21 ema on the weekly until that trend changes this is very clearly a bull market regardlesss of the macro issues everyone keeps pointing to. 565.16 is still the breakout on the SPY and you just have to keep that number in mind because if we go back and close below that, you probably need to start removing some leverage and longs you’re worried about short term.

The real theme of the week is China and how that is probably where you want to be right now. These are the names that are flying right now and for shorter term 1-3 month trades you want to be selling puts or put spreads to get in these names lower. They’ve run hot, their RSI is overheated, but this can be this way for a long time, look at NVDA starting last summer. The volume and option flow this week are telling you this China move is backed by alot of real money right now. Below is FXI, look how long it has been since China was over the 200 week, 2021 was the last time and in a week it ripped up nearly 20% into it. Again I don’t believe in chase this stuff, but I do believe in looking at daily charts, finding gaps, finding things like the short term 8/21 ema and selling puts at those and letting a name come to you. Just remember every name is a buy, it’s a matter of where other players are going to step in on the chart.

KWEB which is China tech, similar to our Nasdaq has more room to run to the 200 week. The issue with China has been their government is not trustworthy, that has not changed, what has changed is the money flowing in their stocks now from investors who are constantly rotating to the next thing. We saw it earlier this year with boring dividend value names. That’s all that is happening, China is just so beaten down after the last 4 years, the valuations were dirt cheap and their government is stimulating hard now, but the issues that made China not trustworthy are very much still there so if you go in, know you will likely be dealing with those same things still.

As for this week’s best idea, I know I mentioned DOCU the other day and that has had a lot of fishy trades in the database recently but I want to talk about a name that is just very far below the cost basis of one of the best investors of all time, it continues to see put sales trying to mark a bottom and it is at a do or die spot on the chart, I felt it was more important to discuss it now as the dislocation between where it sits and all the analyst targets is getting too big to ignore.