Controlled Chaos - Stock Trade Ideas 5/6/19 - SPY, UVXY, TVIX, LYFT, NFLX, TWTR
We all know the news. China is down 5%. U.S. futures down 2%. Okay, Okay so how the hell do we trade this?
In my personal opinion, investors may have finally found their reason to take some gains after the run-up this year. That being said, depending on how far stocks gap down there could be ample bounce opportunities before another leg lower IF the 25% tariffs are confirmed and/or China cancels flying to the United States Wednesday. Otherwise, if China still goes to the trade meetings or the tariffs were a bluff, the market will rally back to highs. Trumps long-trap may turn into a short-trap if he can save the trade deal this week.
Do personal opinions on macro-economic events we have no control over really matter though?
HELL NO! I could be completely wrong, so...
CONTROL CHAOS by using PRICE ACTION pivot points (supply/resistance & demand/support levels). Keep your emotions out of it. Know your max-pain point before entering a trade. Whether utilizing options to know defined risk or having a hard stop-loss set; don't let one trade take you out of the game.
Having no real bias to start the day will be hard, but that is the goal. Thus, we'll see what day-trade setups emerge in the first 30 minutes. Plus, how many swing setup daily charts are still intact or destroyed, etc. Or if volatility sticks around, it'll be time to put on some strangles or straddles to capture either directions move.
I was caught long some calls, but I always preach: never go all-in on any one trade. I have a few SPY puts left from when volatility originally hit after the Fed announcement last week. Lucky hedge. I still have cash available to buy/sell as intra-day setups arise to get back on track. Individual stocks I'm still willing to ride out until longer-term support fails. Example is LYFT. I'll probably add a few more calls on a weak open and continue to swing it.
Don't panic! Wait for setups. I can't stress this enough. Long and short setups will emerge. You don't have to buy or short anything just because there is cash in your accounts. Play what the market gives us. While I do expect a gap down in most stocks, I wouldn't be surprised to see early morning setups for bounce plays or continuation lower. Don't force it. You can't tell a stock where to go. Let it guide you.
Stay Calm and Trade On!
SPY - 290 is the main support area that needs to hold this week. If it fails, be on the lookout for me to buy at the money puts. Here are a few levels to make note of.
UVXY, TVIX, VXX, etc. Be on the look out for these to spike IF the market pullback starts to look more feasible. These are great short term hedges if the market decides to give out. Or day-trade ops if the setups are right. Keep in mind, they are designed to go to $0 long-term. Reverse split and repeat. They are short-term vehicles only.
NFLX - Watching for long-term 385 breakout. I started small into 390 calls just to be there, will add if it starts to go.
LYFT - Closed right on breakout level Friday. Probably gaps down some and ideally reclaims after it works some scared money out.
TWTR - Nice breakout over 40 on Friday. We'll see if they can support it and get it going after a gap down. Still thinking mid 40's coming here in coming weeks.
Full Disclosure: I'm long TWTR, LYFT & NFLX call options and have strangle options on SPY. I'll post more setups on twitter as they arise to my liking as well as a trade plan if I'm looking to buy/short. Happy Trading!