SMH
Long Opportunity Coming in AMD?Like in gold prices, we didn't get the expected dump we use to see at the B extremity of a flat correction . A triangle is possible in AMD . Prices might be pushed by the pushed by the daily Vegas waves.
Like Several Stocks, AMD Could Be in a 1212 StructureLike Several Stocks, AMD Could Be in a 1212 Structure
THE WEEK AHEAD: CCL, XLU, XLE, SMH, TQQQ, /CLEARNINGS:
CCL (67/284) (What?! 284% 30-day) announces earnings this coming week. Unless you've been under a rock the past several weeks, you'll know how hard it's been hammered with COVID-19 and can easily anticipate further hammering, both with earnings, forward guidance, and the potential reduction of its 2.00 annual dividend (12.86% yield as of Friday close). They have yet to announce a dividend cut, but cruise lines are also not part of the $2 trillion bailout package, so there is probably more pain ahead in the short to medium term, and a potential suspension or reduction the dividend payment will only add fuel to the fire. For those looking to bet on an eventual recovery, however, the May 17th 10 short put is paying 2.30 at the mid price as of Friday close with a resulting cost basis of 7.70 if assigned, a 53% discount over where the stock is currently trading.
EXCHANGE-TRADED FUNDS ORDERED BY RANK
XLU (67/57)
XLE (67/99)
SMH (67/72)
USO (67/161)
EWW (59/86)
EWZ (59/95)
GDXJ (59/1O2)
GLD (58/35)
XOP (49/115)
SLV (48/63)
FXI (44/49)
GDX (41/78)
TLT (34/28)
BROAD MARKET EXCHANGE-TRADED FUNDS ORDERED BY RANK
TQQQ (80/175)
DIA (78/76)
IWM (76/72)
SPY (71/65)
QQQ (71/55)
EEM (73/61)
EFA (53/50)
FUTURES ORDERED BY RANK
/NQ (74/72)
/ES (71/66)
/CL (58/34)
/GC (58/34)
/SI (48/60)
/ZS (45/23)
/ZW (36/36)
/ZC (22/34)
VIX/VIX DERIVATIVES
VIX finished the week at 65.54 with the /VX futures term structure in backwardation.
MUSINGS
On Margin:
Truth be told, I'm not doing a ton here besides either (a) waiting for assignment; or (b) making adjustments where doing so doesn't subject me to "call side whip" such that my put side headaches become call-side ones. And although the high volatility environment is great for premium selling, it does have one minor, pesky side effect that I may have mentioned before -- options liquidity hasn't been all that great, even in what are usually the most liquid underlyings. Additionally, I generally like to be managing the smallest number of crap piles at once as possible, and this closely correlated sell-off has resulted in a few that I'd like to clean up before potentially inheriting more. To a certain extent, one has to be fine with that; it is, after all, the challenging trades that make your life interesting.
The IRA:
As usual, the IRA's a patience game. Having stuck short puts out there in things on my shopping list (HYG, XLU, IYR, and EFA), the only thing to do here is wait until expiry, at which point I'll be assigned shares or the short puts will expire worthless.
On the other end of the stick, I'm looking to dump pieces of my low-yielding TLT at or near all-time-highs and substantially up from my cost basis in those shares at or below 110, which is the last time I acquired shares. Unfortunately, I have been less than religious about keeping tracking of my cost basis of shares in the IRA, since the basic setup was that these were intended to generally be "never exit" or "never get called away" plays. However, I think U.S. treasuries have had a fairly good run, and there are probably better places to stick that capital.
The /CL Chart:
I've thrown up a monthly USOIL chart here to show how current prices in oil could be a multi-month, if not multi-year opportunity here to take a bullish assumption position in either /CL directly, USO, or one of the beaten-down oil exchange-traded fund sector exchange-traded funds (XOP, OIH, or XLE). With /CL implied/rank at 67/165, I've done some of that already with /CL out-of-the-money short puts, (See Posts Below), but this can also be done in USO more incrementally, since it's a much smaller instrument and has the added advantage of having .03 wide markets here. Alternatively, there is also the USO Zebra/Call Ratio Spread, about which I'll post separately ... .
$SMH Approaching Res... (BEARISH!)Team,
Be careful going long anything today. Everything seem to be approaching resistance. Keep an eye on this one and as always...
***Let's talk about it***
OPENING: SMH JUNE 19TH 129/170 SHORT STRANGLE... for a 3.66 credit.
Metrics:
Max Profit: $366
Max Loss: Undefined
Buying Power Effect: 14.95
Credit Received/BPE: 24.5%
Delta/Theta: .44/3.97
Notes: Going out to the first expiry in which the at-the-money short straddle is paying greater than 10% of the stock price. Doing the basic delta under hedge drill on this one: delta under hedging at intervals to maintain net delta < theta, if possible, allowing theta to work its magic.
THE WEEK AHEAD: SQ EARNINGS; SMH, XOP, GDX, GDXJEARNINGS:
SQ (77/59) announces Wednesday after market close and has the volatility metrics I'm looking for out an earnings-related volatility contraction play -- implied in the 70th percentile or greater over the past 52-weeks and 30-day at or greater than 50%.
Pictured here is an SQ April 17th 72.5/100 short strangle camped out around the 20 delta paying 3.55 on a buying power effect of 8.37 (42.4%) and delta/theta metrics of .66/7.78. For those high on defined, consider the 65/70/95/100, paying 1.58 (46.2% credit received as a function of buying power effect).
EXCHANGE-TRADED FUNDS ORDERED BY RANK/30-DAY IMPLIED AND SHOWING THE EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING >10% OF STOCK PRICE:
SMH (73/30), May
XLE (63/23), July
USO (51/37), April
XBI (48/30), June
XOP (45/37), May
FXI (40/23), August
GDX (40/29), May
GDXJ (38/33), May
EWZ (26/27), June
I didn't get an opportunity to do a ton last week beyond take off a few setups in profit, so this is probably an opportunity to build up theta pile in stuff that I don't have plays in currently and to add to stuff via delta under hedge that has experienced an up tick in volatility over the past several days.
BROAD-MARKET ORDERED BY RANK/30-DAY IMPLIED AND SHOWING THE EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING >10% OF STOCK PRICE:
QQQ (59/23), September
SPY (43/17), November
IWM (42/19), September
EEM (37/19), September
In spite of the expansion of volatility over the last several days, broad market isn't paying fabulously in shorter duration, so if you're going to play, look to start out small, add small over time, and take profit somewhat aggressively.
FUTURES:
/GC (70/15)
/CL (51/36)
/NG (47/39)
/ZS (43/19)
/ES (42/17)
/SI (33/89)
/ZW (24/24)
/ZC (23/13)
VIX/VIX DERIVATIVES:
VIX finished the week at 17.08 with the March, April, and May /VX futures contracts trading at 17.05, 17.33, and 17.09 respectively. It's tough to divine what /VX futures traders' thought processes are here, but it looks like they may be focused on the exogenous event of the year -- the expiry around the general elections, where there is a huge term structure "hump" from September (currently trading at 17.75) to October (20.55), with the remainder of the preceding structure being fairly flat in the interim. There is a mere .70 differential between the March contract price and the September one which I regard as unusually flat, which doesn't make for good term structure trades. Naturally, at some point, the term structure may adjust to a more "standard look," but in the mean time, look to add short to VIX derivatives (VXX, UVXY) on pops to VIX > 20% via short call vertical or long put vertical with a break even at or above where the underlying is currently trading and shooting for one-third the width in credit (if a credit spread; don't pay more than 2/3rds the width if a debit spread).
THE WEEK AHEAD: ROKU EARNINGS; USO, SMH, EWZ, GDXJEARNINGS:
ROKU (64/83) announces earnings on the 13th (Thursday) after market close and looks to be the best play out of earnings announcements occurring next week from a volatility contraction standpoint.
Pictured here is a fairly straightforward short strangle camped out around the 17 delta in the March cycle, paying 5.62 on buying power effect of around 12.50 (45% credit received/effect ratio) on margin. For those looking to define their risk, consider the 90/100/150/160 iron condor, paying 3.37 on buying power effect of 6.63 (50.8% credit received/effect ratio) or some iteration of that where you look to receive one-third the width of the widest wing in credit. There is some call side skew here which you may to consider accommodating via a ratio'd short strangle or a "double double."*
EXCHANGE-TRADED FUNDS WITH EXPIRY IN WHICH AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE:
XLE (59/22), July
FXI (54/24), August
SMH (51/27), May
USO (48/39), April
XOP (45/36), June
EWW (43/19), September
EWZ (33/27), May
GDXJ (15/27), May
GDX (10/24), June
My general tendency here has been to go with the shortest duration that's paying first (assuming that I'm not already in a play), and then consider longer-dated thereafter. Here, the shortest duration that's paying is in USO (April), followed by SMH, EWZ, and GDXJ (May), and then XOP and GDX (June).
BROAD MARKET FUNDS WITH EXPIRY IN WHICH THE AT-THE-MONEY SHORT STRADDLE IS PAYING GREATER THAN 10% OF STOCK PRICE:
EFA (45/13), December
EEM (42/20), September
QQQ (37/19), September
IWM (34/18), September
SPY (30/15), November
I've been working SPY longer-dated for quite some time now just to have something on in a constant state of theta burn where shorter duration isn't paying. Just for comparison's sake, the EEM September 37/49 is paying 1.14 on a buying power effect of 4.35 (26.2%); the QQQ September 195/257, 5.77 on a buying power effect of 22.94 (25.2%); and the IWM September 142/183, 3.78 on a buying power effect of 16.50 (22.9%) versus the SPY November 280/367, 8.23 on a buying power effect of 33.24 (24.8%).
FUTURES (EXCLUDING CURRENCY/TREASURIES):
/CL (52/40)
/ES (51/16)
/NG (30/39)
/SI (30/18)
/ZC (29/18)
/GC (24/11)
/ZS (15/18)
/ZW (8/37)
VIX/VIX DERIVATIVES:
VIX finished the week at 15.47, with the February, March, and April /VX contracts going for 16.07, 16.27, and 16.70, respectively. The term structure has lost a good deal of the steepness we were enjoying just a few weeks ago when M1-2 contango was at a whopping 19.16% and M4-7 at 6.24% (it's currently 1.25 and 3.45%, respectively) and my tendency would be to probably wait until the February contract drops off to see if a term structure trade is in the offing. They're not exactly paying me huge to go, for example, with an April setup over a March one, with the differential being a scant .43.
* -- E.g., the 2x90/2x95/155/165 iron condor paying 2.91.
Semiconductors & Hashing-Rate Correlation StudyThere are long periods of positive correlation between average bitcoin hashingrate in gigahashes/second and performance of major semiconductor ETFs like SOXX and SMH
As hashing and computing power in general shows massive increases in demand there are only a few companies that have the materials and knowledge to produce 'rocks that think' aka processors and other computing components made of earth metals and silicone.
When I see big printing bars in hashing power but 'divergence' in correlation I may consider adding to semiconductor positions via options on semiconductor ETFs and computing component companies like INTC, AMD, NVDA, and the like as it means someone went out and made a huge investment in processing power in order to make a 'blip' on the hashing map but the ETFs are reflecting a downside move. This divergence between correlation of hashing rate and semiconductors displays a market inefficiency in the expectation for demand of semiconductors and actual demand for semiconductors. This divergence is an opportunity for us to capture in my estimation.
I hope this makes sense and helps your own analysis
Good luck have fun
Much Love
xoxo
snoop
MU strong stock trend in stronger On a yearly performance, MU did better than 77% of other electronic components stocks. Now it is currently trading near its 52 weeks high so it is performing in line with the broader markets.
On a mid-term based daily chart, we could see a strong wedge uptrend pattern with momentum, and a few minor pullbacks occurred due to some broader geopolitical impacts such as the trade war and global 5G development uncertainty. But the stock is kept showing higher lows signaling the investors' passion for it.
MU is about to consolidate at the 56.8 support level which is lying underneath the price as the chart indicated above. Since the ATR volatility risk has not packed in too much yet at the current high, DMI overall trend indicator is still heading up and bull-side trend strength is still controlling the directional momentum, I would go long with it. My target is simply at the prior all-time high resistant area which is indicated by the red band above the stock price roughly at 60, any pullbacks that break below its bollinger bands middle band could be seen as a stop-loss trigger.
Besides, on the order flow side, there were over 2.9 million valued long calls detected from the options chain today with a strike at 60, expire in March.
AMD "in lisa su we trust" lolSemiconductors rallied after news the U.S. will remove currency manipulator tag from China. Trade tension between the U.S. and China has been easing which likely to give another boost in the chips industry. Among those 137 stocks, AMD outperforms 97% of them. Currently, it is trading near its 52 weeks high and however S&P is also trading near new highs, which makes AMD's performance in line with the market.
AMD is currently showing a bull flag pattern. There was a flag pole right left to its first bar as the chart shown, after a consolidation AMD appears to have broken out from the first bull flag pattern. And now it seems has been shaping another bull flag pattern with a consolidation range which is indicated above(support roughly at 47.6 and resistance roughly at 49.1).
The outside range indicated by red lines were the expected move that options market priced in for this week, means we are supposed to be inside of this range with 3.05 higher or 3.05 lower of AMD and it should stay in this range about 68% probability of the time for this week.
ATR indicator is about to trend downside means the risk of the stock starts to be compressed and consolidation may need. So I think the stock will come back to test the upper edge which is the breakout area roughly at 49.1with a few sessions moving forward then once the momentum been fueled it will break out to show another bullish trending to upside.
Besides, the overall trend indicator DMI is heading upward as the long trend strength(blue line) is still dominating the directional momentum. And today there were 174.42K, 186.93K, 136.71K with strikes of 49.5, 48, 55 long calls bets set on Jan, Feb 14th and Mar respectively which also is signaling the quite bullish view from the investors.
So I will consider buying a pullback until the price edging close to the lower edge of the orange line as a second entry and target a 55 stop gain for this setup.
SMH Short Thesis The Next MonthI'm not currently short the semis but upon doing some research I found a nice setup thesis. Similar weekly candles. I see the previous time SMH found it's low about 15.7% down from that weekly candle close after 29 days. If you use the same 15% calculation after 28/29 days, it brings you to the 23% fibonacci level at $120.
This is only a theory at this point and I'll continue to do some digging on it. But it looks ripe for a give back leading up to earnings or after earnings. I'm going to look for a put spread entry on Monday.
Good luck - and as always, don't trade based on my opinions or hypotheses.
SMH
SMH - Short-term BearishTRADING ACTIVE
Chart Details
SMH had sell signal on Daily yesterday.
I entered trade but did not post. Waited for trend dots to confirm.
Trend dots confirmed bearish trend very end of day.
Gaps to fill below down to $111.
Weekly RSI trend is about to breakdown.
Daily trend dots confirmed bearish trend.
I will post a Weekly view chart for SMH when trend confirms Bearish weekly view.
Entry Options
I am entered in the Jan 17. Expiry, 140/145 Call Credit Spread (Bearish bias). $2.48 Credit received. This trade assumes both 140 & 145 Calls will expire worthless with SMH below $140 by Jan 17. Total credit is kept as profit. Max gain and max loss both approximately $250. Average POP around 65%. Not the best.
About Me
Thank you for liking, commenting, throwing up a chart, following, or viewing.
I am not a financial advisor. My comments and reviews are based on what I do with my personal accounts.
I am transitioning to my new website www.moneypatterns.com. Same guy - new name. :)
Website will be ready for launch mid-January 2020. Thank you for your patience while I try to juggle everything and maintain the same standards.
Disclosure - I am long BTCUSD, GBTC.
Short term - GDX Bullish, SPXS Bullish, SMH Bearish
OPENING: SMH MAY 15TH 110/155 SHORT STRANGLE... for a 3.62 credit.
Notes: Going out in time to the first expiry in which the at-the-money short straddle pays more than 10% of the value of the underlying. Will look to manage fairly aggressively, looking to take profit early. Just looking to keep some semblance of a theta pile on and burning while I wait for a volatility pop to put on trades in shorter duration expiries.
