BotTrigger Trade Alert: $AAPL limit order to sell the May $175 Put Options @ $12. Right now those puts are going for around $9.
Our entry of $5 puts us around 80% in gains. If we get a push lower tomorrow to fill the $169 gap on AAPL that limit order would likely get filled easily for $10 around $169 or reach a $12 value around the $167 area. Don't be surprised to watch those puts reach $12 to $15 in value in the coming days. However we're going to take our gains rather soon if AAPL makes an abrupt move or gap down lower. Although AAPL's chart shows that downside momentum has more to go, we want to respect how oversold AAPL is on the hourly chart. We may look to add those puts back if we get a weak bounce and favorable pricing.
AAPL - this bear shall have legs. I see no evidence that the bottom is in or any signs of a reversal from this near term pullback. More likely lower to go. We have a gap to fill around the $169 to $167 area. Stocks love to fill those gaps as it's retesting the order book for true buying/selling volume. Gaps largely occur on thin order books that can be easily manipulated. Gaps are largely retested as a means to snuff out the truth.
There is an abundance of financial news to digest today; the market had no chance of keeping up. The Dow was up 200 points before going negative, then back and forth to finish -45. Here’s the rundown:
1- Trump’s tariffs will be announced sooner than expected. There’s a press conference scheduled for Thursday. Few details have been leaked other than Trump’s goal of $60 billion in tariffs as a penalty for Chinese IP theft. China is preparing to retaliate against agriculture and soybeans. Some traders are optimistic tomorrow’s press conference represents peak trade risk. Perhaps the market will experience a relief rally, however, it does seem a little premature to assume trade wars won’t have a negative impact on corporate earnings, inflation, or economic growth. The administration has announced it will revisit tariff actions in two weeks. This won’t go away as a negative catalyst until the U.S. and China can negotiate new agreements to reopen free trade channels.
2- Fed Chairman Jay Powell hiked interest rates and raised the forecast for additional hikes in 2019 and 2020. Job growth is dictating this improved forecast. Powell spooked Wall Street by mentioning members of the committee are concerned about trade policy after speaking with CEO’s from various industries but trade will not dictate the Fed’s rate hike outlook. He also said stock prices appear elevated. The takeaway is that Fed tightening is on track and won’t reverse unless a change in policy is warranted by a crisis.
3- Saudi Arabia’s Mohammad bin Salman visited the White House with a singular purpose of securing Trump’s support against Iran. After Trump’s decision to fire Rex Tillerson and replace him with Mike Pompeo as Secretary of State I think MBS is confident Trump will exit the Iran nuclear deal on May 12th and cooperate with new sanctions. Sanctions against Iran will likely cause a spike in oil prices which is good news for Saudi Arabia and Russia. Sanctions against Iran are also in the best interest of Israel. USO calls are being added to the watchlist as an upside hedge if the market refuses to drop below S&P 2581 due to trade wars. That likely won't happen util we reach the support lines define above, but we are watching if a strong reversal shows itself. Going long commodities makes does sense at this stage of the cycle if market stability can hold.
4- The EU presented its plan on Wednesday for a ‘digital tax’ in order to level the playing field between tech and traditional firms. Rather than tax a company like Apple based on its headquarters in Ireland, the new law will levy a tax against Apple revenue in whichever country its products are sold. This is a big blow to the status quo tech environment. Additional taxation in Europe combined with potential tariffs from the Chinese supply chain will result in lower profitability. And to think, back in January we all thought this was supposed to be a year defined by tax cuts...
Taking into consideration the prospect of Chinese tariffs and trade retaliation, faster than expected interest rate hikes, Iranian oil sanctions, and the EU digital tax at a time when our Fed Chairman says stock prices are elevated does have us concerned. Our conviction remains bearish on the near to intermediate term at this time. The primary term trend however is still very bullish. Although there's some strong weakness that has cultivated in the last few months...we still have to assume the bull trend is in effect and that such sell offs are buying opportunities. Last week we were 170 points above the S&P red line of 2581. Today we’re only 130 points above that prior low from February 8th. Technical and fundamental risk is still very much in play.
Crypto post with new buy alerts & rotational plays coming this evening. The juice on the recent bounce is real.