Post Game: Strong Like Bull
Long and strong! It’s good to be back writing for VT after a 24 hours hiatus thanks to some unexpected life events. But all is well, and hopefully y’all have had a profitable period as this market just will not fade. Let’s dive in to the recent action.
We tweeted out this morning that we sold our position in Apple $AAPL. The events from the last 24 hours were nothing short of dreadful. We were actually moderately impressed with the 5S and 5C, but GOOD LORD Tim Cook is not doing himself any favors. He continues to drop the ball in China as the company has effectively priced itself out of the middle market with the 5C. The phone looks totally puzzling now as we have a hard time believing it will find enough traction in the North American market. We peeled our long stock position off at $475 pre-market and we aren’t too eager to get back in. We scalped a few bucks on an option trade after the stock rallied off the lows, but that rally was faded over the course of the session.
We also let go a couple of losers in $TSLA and $TAP. We actually recouped some of our lost premium on our $TSLA calls, but we lost half of a small position in $TAP puts. Timing is everything in trading, and size does matter here, too.
Our book is very lean now and we have plenty of flexibility. We picked up $GOOG calls for next week at $495. It looks like $AAPL capital (rhyme! sort of) was being rolled up into Google and Facebook today, and we actually like both names, but we chose to put some capital into Google as Facebook passed its all-time high today. The chart looks pretty strong and the 890 straddle is implying at $19 move by the end of next week, which could make for some nice gains. Google closed on the dead highs today just above a key resistance level. Look for continuation to $900-$905 in the coming sessions, followed by potential continuation to the all time highs.
Another stock we initiated a position in is Biogen $BIIB. This stock has been in a bit of a holding pattern over the last 3 months, but it has been building a nice rounded bottom and broke out today in the last hour of trading. We initiated a long at $232.39 and are looking for continuation in the coming sessions. The stock made its way into the gap above $234.70 and has room to run to the $240 level where the YTD highs sit.
We didn’t get a chance to write about it yesterday, but we hope some of you caught our note in yesterday’s morning post about Netflix $NFLX. We signaled that $NFLX could surge if it sustained the morning gap up and made it to $299, and that’s exactly what it did as it move straight up throughout the session yesterday. If you were long, hopefully you were prudent and took profits yesterday, though the stock did put a decent tail on today’s bar.
We initiated two put positions on unusual option activity in Assured Guaranty Municipal Holdings $AGO. For those of you that are unfamiliar with $AGO, the company is a municipal bond insurer and has been getting whacked since earnings and the Detroit bankruptcy announcement. The bears stepped in big time in the latter half of the session, buying up puts with both October and April expiration hand over fist. The stock got thumped in the latter part of the session and volatility spiked, creating some nice value in our puts.
Lastly, we also shorted $BEN via short stock as it tested the bottom of the Ichimoku cloud and could not break through. The stock rallied into the bell, which we obviously don’t like, but we’ll keep an eye on it. Our stop is tight just above the lower portion of the stock’s gap at $48.50.
The market has been on an incredible run as the S&P has rallied 7 consecutive sessions, making it a bit of a precarious spot for shorter term traders. It’s still hard to get aggressively short and we’ve seen high short interest names like $TSLA shake off the bears. Keep your eyes peeled for short candidates, but don’t lean too hard that way until the market stops raging higher.
We’ll be out of the office on Friday, but we should be back to our usual pattern of three posts a day tomorrow and next week. Feel free to shoot us questions on Twitter @vikingtrader14 or via e-mail at firstname.lastname@example.org.