Welcome back to the blog!
Stocks are still mostly grinding sideways or up slightly. Below is the weekly chart of SPY.
I don’t like prices up here for going long unless I was doing short weekly trades (less than 2 month holds). Over any longer time period (>2 months) and I think we are more likely to be lower than higher, we will see what happens. I’d want to be long near 300 and 275 for medium term swings (~3 month hold). Below I discuss some pullback trades I plan to go long on if SPY does pullback another 7% (to 300) and 15% (to 275).
I’m considering going long on Tesla, Netflix, Square, and/or Nio on any more sustained weakness for a short/medium term swing trade. For example, although I don’t like Tesla from a fundamental perspective at all, the trend is still up, and once they report earnings next week, it could present a nice “buy the dip” opportunity for a swing trade back up.
Same goes for Square, Nio and Netflix – although I think they are extremely expensive from most metrics, they present good short/medium term swing trading opportunities.
I plan to hedge my bets with a couple of shorts in the technology sector to reduce my overall sector risk when going long though. Below are the charts of Tesla, Netflix, Square, and Nio, and where I plan to enter.
Tesla daily chart below (long at 900-1000):
Netflix daily chart below (long at 400-450):
Square daily chart below (long in 80-90 range):
Lastly, Nio daily chart below (long at 8-9):
Enjoy the rest of the weekend, and see you next week (unless we get a large market sell-off and I swing long 🙂
Bigfry's Blog 
Thanks for the posts, I always look forward for them.
Curious, if you would still keep the SPY-FXI pairs trade given how bad the banks are trading even after earnings ?
Any reason why you don’t sell puts at the support levels instead of waiting? You don’t like the capital to be locked? or you want some confirmation via price action around the support levels?
Lastly, could you share your insight on AMZN (for long term 1-2 yrs) ? I am thinking 2500-2600 or 2100-2300 levels look like good entries. I doubt if AMZN would come to 2100 levels in the near future given how the big money piling on it. But, I would like to hear your thoughts.
(Sorry, I must have asked too many questions – feel free to skip the first two)
Again, appreciate your effort, you definitely helped me.
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Hi Vamsu, I’m glad you enjoy my posts and look forward to them. I’m still holding onto my SPY XLF pairs trade, as it has been doing fine despite bank earnings (I’m up about 1% since opening the pairs trade). I didn’t look much into the bank earnings, but the spread between SPY and XLF didn’t widen much or at all. I’m solely trading off the price action and ignoring the earnings reports.
I don’t mind locking up capital by selling puts near support levels, but XLF is still quite far from what I think is a strong support level. I would like to sell puts if it is in the 18-20 range, but the premium isn’t quite high enough currently since it’s trading at around 24 right now. Good idea on selling puts though, I somehow hadn’t considered it and instead opted for the pairs trade.
I really like Amazon at the 2100-2300 levels like you said (closer to 2000 actually, but close enough), as that is where it previously broke out to new highs. 2500-2600 seems a bit too high from a risk/reward standpoint, but it could easily continue the uptrend at that level. Perhaps you could have a plan of scaling in a small position near 2500-2600, and then dramatically increase your position size at the 2000-2300 level. I’ll make a blog post on AMZN now because I value you as my blog reader!
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Interesting. Given the interest rates, QE, increase in loan loss provisions I doubt XLF would go up. I guess the other option is for SPY to go lower and XLF stay roughly around the same price for your trade to workout in our favor OR SPY and XLF don’t contract for a long time is also an option though the probability is 86-89%. It is possible too because we are in outside standard deviation times 🙂
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Correct, I just need the spread between them to shrink in order to make a profit.
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