Stop Over-Thinking This Market. Preparation for November 22nd Opex

Stop Over-thinking:
I tend to be an over-thinker and I have learned that over-thinking the markets doesn’t work for my P&L. If you can relate to this let me say it as simply as I can….GET OUT OF YOUR HEAD! Until we have evidence of a shift taking place in this market continue to do what is working: buy dips, sell on the way up, rinse and repeat. If you are a longer term trader than just ride the trend. Two great trend followers that I like to follow are @SJosephBurns and @JBoorman.

If you are holding onto any of the below statements, give yourself a break and let them go.

– But everyone is bullish
– But we have already gone up so much
– But QE is creating a bubble
– But we are due for a crash
– But the PE is so high

Where are we going next? 
I had a bullish outlook last week as many of you know based on my 1793 before 1740 bet. I also sent out this tweet on Tuesday evening, which you can view here.

On Wednesday morning we hit 176.09. That was an amazing buying opportunity. This week I feel more neutral about the S&P, but see a ton of great looking stocks (many of our favorite momentum ones) that look like they are ready to burst at the seams. I also like the look of the small caps (IWM), biotechs (IBB) and finacials (XLF).  SPX closed Friday at 1798.22 and a bit outside of its upper BB band. It can definitely still go higher, but grinding sideways would be healthier while other sectors and stocks play catch up. I wouldn’t be surprised to see a small pull back as well next week to shake out some people before Thanksgiving and months end. If we pullback I would look for support around 1782, then 1770, and 1746-1750. On the upside we are in free air.

Open Interest: The following graphs are for November 22nd expiration.

SPY: Highest open interest is the 176 puts. If we do get a decent sized pullback, that is where I would look to get long.

AAPL: Still trying to go higher. Those calls always seem to get in the way. For next week highest call open interest is 535 and 515 for puts.

AMZN: Chart looks bullish. Price currently above the highest open interest 360 calls.

BIDU: Staging its come back. Chart looks bullish and price is currently above highest open interest of 160 for calls and puts.

FB: Took a little break, but looks like it wants to resume its uptrend. Needs to push and stay over those 50 calls. 
GOOG: consolidating earnings gains very well and looks good. Highest open interest is 1,020 puts.
LNKD: Has been under-performing its peers for weeks now, but looks like it’s wanting to make up for some lost time. Highest open interest is the 230 puts, which is right beneath where it closed Friday.
NFLX: Closed at its highest level since earnings and looks like it’s setting up to reclaim that intra-day high from that day. Highest open interest is the 340 puts.
PCLN: What a beast! Very bullish chart, but for now I’d like to see it digest some of its recent gains. 
TSLA: A mess and still has a gap around 124. 
TWTR: No idea how open interest will affect this name, but might at well start from the beginning. 

5 Enlightened Replies

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  1. Rachel says:

    thanks for catching that!

  2. Hawe says:

    Hi Rachel, where do you get the open interest for each stock ? Thanks for sharing

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