A Still Shaky But Now Stretched Stock MarketTechnical indicators keep flagging the stock market's underlying weaknesses. Still, the latest shallow selling is a bit over-stretched.
"A Still Shaky But Now Stretched Stock Market" drduru.com $SPY $QQQ #VIX #AT40 #T2108 $BA $BIDU $CAT $GLD $SLV $DXY $USDTRY #forex $M $NFLX $RIO $BHP $USO $WHR
BIDU
China bearish: Buy the trade war tech dip BIDU NTES IQ TCEHY On Friday the 3rd August 2018 Chinese stocks ceded their ranking as the second-largest equity market in the world amid an elevation in trade tensions after the Trump administration said it was considering increasing the initial proposed tariff.
Buying the dip: Considering Chinese markets are at almost a one year low and under a temporary trade war, a knee jerk reaction will eventually take place causing an influx of capital across the market. I cant predict when this would happen or whether stocks have reached their bottom but I consider this another buy opportunity.
THE WEEK AHEAD: TSLA, AAPL, BIDU, X EARNINGSAn interesting earnings announcement docket ahead this week:
BIDU (rank 57/implied 39) announces Tuesday after market close; AAPL (rank 54/implied 26), Tuesday after market; TSLA (rank 87/implied 70), Wednesday after market; and X (rank 61/implied 53), Wednesday after market.
Out of these, TSLA has the kind of volatility metrics I'm looking for in an earnings related volatility contraction play, but due to size of the underlying, it'll have to be defined risk, if anything. Because it can be a mover and its weekly expiry liquidity isn't great, my tendency would be to go out to the monthly since it's not all that far away in time and is likely to yield a fairer price fill. Preliminarily, the Aug 17th, 20 delta 250/260/337.5/347.5 is paying 3.07 at the mid, but I'd only want to play if I could get at least 1/3rd the width of the 10-wide or 3.33.
For similar reasons, I'd use the August monthly with BIDU (weekly expiry liquidity): the Aug 17th 20-delta 225/235/277.5/287.5 is paying 3.03; go in a little tighter to the 23 delta, and you get paid 2.89 for the 7 1/2 wide 230/237.5/275/282.5. I'm frankly loathe to tighten these puppies up because as we've had a couple greater than one standard deviation movers this season (FB, TWTR), and no one (generally) likes to get whipped.
In all likelihood, however, if I play anything, it'll be X, since I feel comfortable going naked on that underlying due to size and just generally prefer managing a broken naked over a broken defined: the Aug 17th 37 short straddle is paying 3.83 at the mid with a 25% take profit target of .96 and the Aug 17th 33.5/41.5 paying 1.17 with a 50% take profit of .59; that >1.00 for a twenty-ish delta short strangle is decent for a $37 underlying.
AAPL just doesn't have the juice, with below 30% background implied ... .
On the exchange traded front, it's more of the same ... . Volatility can be found in EWZ and XOP, but even then, it isn't as great as it was a few weeks ago: EWZ is 30.6%; XOP at 26.2%. Nevertheless, I'm maintaining positions in those as core premium selling positions for the time being, since XOP has had comparatively decent premium in it over time, and EWZ is going on a several week binge of greater than 30% implied.
Major Food Group Trades: TLT has come off of 122.50 I've temporarily marked as the place to short from, so I'm waiting for a revisitation before re-upping. Gold has been absolutely hammered, but I'm unable to get into anything satisfactory in GLD; the upward call diagonal metrics always require me to pay more than 75% of the spread width, which makes a play unappealing. I'll look again this week, but have been repeatedly rebuffed. And, in spite of the little sell-off we had on Friday, broad market doesn't look all that sexy: SPY implied is at 12.2%, QQQ at 19%, IWM at 16.5% and EFA at 4.7% -- all well in the lower half of their 52-week ranges.
China's Double TopI posted about this a while back, so wanted to reiterate given the developments abroad.
The HSI appears to have formed a double top (with a potential bull trap, too) and I suspect selling pressure may escalate.
A decisive break in price above the top would need a few weeks of closing above to invalidate the pattern. Given the negative catalysts surrounding China regarding trade, I don't see how bulls reverse this train.
Alibaba drowning in bullish patternsBABA broke out yesterday of a big bullish pennant. Ater the breakout it formed another pennant on a small time frame. I entered some calls after the bullish breakout (didn't have time to update). Sold 4/5 of my calls on the way up and holding the rest for a breakout of the forming bullflag. Only trade after a breakout or, if you want to play it aggressively, on support.
Keep the NDX in mind. It's still trading in an upward channel but after a bearish breakout it can lower the whole market, including BABA.
The general conclusion remains bullish with caution.
BIDU Looking for 296 handle. Setup:
It was noted that BIDU stock heading to 296 handle.
Our setup is complemented by the following:
1. Multiple timeframe trend analysis
2. Divergence on H1.
3. Gap analysis
Approach:
Our trade strategy is as follow: We will open two consecutive trades, they will both have the same stop loss but different take profits.
Trade 1:
Entry: 243.89
SL: 225.51
TP: 267.41
Trade 1:
Entry: 243.89
SL: 225.51
TP: 296.84
It should be noted that once TP1 is hit, we will move the stop loss of trade 2 to breakeven.
Risk & Reward:
Total Risk:
2%
Total Reward:
4.2 %
Good Luck :-)
ADDING CHINA BEST OF BREEDS - BABA, BIDU, BZUN, GELYYAdded positions in China as I see strength in growing middle class/consumers.
- More attractive valuation than those in US.
- I believe there is more credibility in investing in China's blue-chips. I expect foreign institution $ to flow back to China.
- I am focusing on purchasing best companies in China in technology space.
- I like internet of things and I believe China is ahead of US in terms of utilizing mobile payment such as WeChat by Tencent. I wanted to begin adding positions prior to Tencent earning release next week on March 28, 2018.
- Only non-internet related company is GELYY. China's first global automaker.
- No in-depth technical analysis was conducted as I plan to hold these investments for longer term. However, the overall China market and tech industry's monthly chart shows upside from here.
- I will be conducting more technical analysis for swing trading in another account and compare results.
Ref only - FXI: IShare China Large Cap
Ref only - KWEB: China tech exclude hardware
BABA:
BIDU:
BZUN:
GELYY: (This is only company that is not internet of things. China's #1 public automaker. Now owns Volvo.)
LONG TO BIDU FOR LONG TIME NASDAQ:BIDU
After Many Good News in Baidu like Partner ship with (Nvidia & Microsoft), they would cooperate
on the developing of a self-driving solutions (Autonomous Driving)
The company announced that more than 50 partners have joined the (Apollo open autonomous)
driving project and highlighted the variegated nature of its partners:
Members of the Apollo alliance are from a wide range of sectors. They include leading vehicle manufacturers, such as Chery Automobile,
FAW Group Corporation, Changan Automobile Group, and Great Wall Motors; tier 1 suppliers, including Bosch, Continental Automotive,
ZF Friedrichshafen AG, among others; key components providers, such as NVIDIA, Microsoft Cloud, ZTE,
Velodyne and TomTom; startups, including AutonomouStuff and Horizon Robotics; and ridesharing companies, such as UCAR and Grab Taxi.
The alliance also extends to five top universities and six local governments, including Wuhu in Anhui Province,
Baoding in Hebei Province, Yizhuang in Beijing, Chongqing Liangjiang New Area, and Shanghai International Automobile City.