Last week really highlighted how much open interest can affect prices and was especially pronounced due to it being quarterly expiration. If you haven’t had a chance to look, check out last weeks open interest and Friday’s closing prices.
There has definitely been some weakening across the board in momentum stocks. If you haven’t had a chance to read my post from the start of they year regarding what could be responsible for this weakness, check it out. It’s been a long time since the momentum stocks look like better shorts than longs. Unfortunately, it’s not easy shorting momentum stocks in a bull market so if it’s not something you are comfortable with, it’s probably better to look elsewhere for opportunities.
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For market commentary and SPY open interest for the coming week see here.
AAPL: The strength late day Friday was hard to miss. AAPL tends to do much better after large OPEX expirations (i.e. monthly & quarterly) so it has ample opportunity to shine next week. The best scenario would be a gap and go over those call strikes, or a big move early in the week. If it waits too long into the week before getting over those call strikes, then chances get slimmer it will do so before Friday expiration.
AMZN: Ugly Friday and I stopped out of my April calls. I’m hanging on to my May calls (remember I got them much lower), but will exit upon any further weakness next week. I don’t like the look of this open interest.
BIDU: Has been a dog lately. Until China names start gaining momentum again no reason to really be here. Having said that, it’s good to start seeing some puts pile up. Perhaps a turnaround is just around the corner.CMG: What a powerhouse. It even held up Friday while the rest of the market was selling off. It definitely has some calls to contend with next week. If it gets over those strikes early in the week, there might still be a powerful move coming.
GOOG: Last weeks open interest was definitely informative and useful, this week much less so. Every time GOOG has sold off in the last year it has been a buying opportunity. I have no idea if that will repeat itself next week or not.
NFLX: Finally getting some real downside. If the 50-day doesn’t hold next week, next level of support doesn’t come in till around 370, followed by a gap. Real short term traders could have fun with NFLX next week because it will probably be volatile.
PCLN: Very similar to GOOG in that over the last year dips have been a buying opportunity. At some point that won’t work and maybe it’s this time, maybe not. Either way, I think there will be large price swings.
TSLA: Same comments as GOOG and PCLN, except this one also gets the benefit of high short interest. I doubt it’s going over 240 next week.
TWTR: Ah yes, then there is TWTR. I still am long and so obviulsy believe it’s goes higher. I did make it very clear in several places last week that I thought it would close at 50 on Friday (see here for one example). If it makes a comeback this coming week, it will have 53 to contend with.