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Weekly Report 2022-09-11

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WEEKLY MARKET SUMMARY 

Following three weeks of relentless selling pressure, the SPY (S&P500 ETF) began the past 4-day trading week on Tuesday with a short, indecisive red candle just above the key 390 support level. A strong bullish engulfing candle launched a rally on Wednesday that culminated in an impressive gap up at the open on Friday above the 400 level, followed by rising buying pressure all the way to the weekly close.

With price action now overextended to the upside and in short-term overbought territory, we'll see how long bulls can keep this uptrend going over the next week. A brief period of rest and consolidation of recent gains would be normal, if not healthy. A sharp drop back below the 400 level and a new test of the 390 support, on the other hand, could indicate that this 3-day rally was nothing more than a dead cat bounce.

Weekly market performance (Week 36/2022)

 S&P500 (SPY) +3.66%
 Nasdaq100 (QQQ) +4.04%
 Dow Jones Industrial (DIA) +2.72%
 Small Caps (IWM) +4.06%

Because of the market's strong rebound this week, the Market Volatility Index (VIX) is now back below the 23 level.

 

WEEKLY TRADING SUMMARY 

With the market in deep oversold territory at the start of last week and many interesting setups, I took advantage of the opportunity to open a few directional positions and posted the details in real-time in the Options Trading Club (OTC).

On Wednesday, with the stock trading at the bottom of a rising trendline acting as support, I opened a simple long call on CCL at the $10 strike and October 7th expiration, for a $0.73 debit.

As the stock bounced strongly on support, the position is currently up +45% after only 3 days.

 

Instead, with HPQ falling sharply after earnings and in deep oversold territory, I sold a relatively long-term duration cash-secured put on Thursday, which is already trading in a profitable zone.

STO HPQ 10/21 CSP $26 for a $0.92 credit
Delta = 0.33
IV = 42%
Projected AROI of about 30% in 43 days

 

As usual, if you have any questions, just send me an email at [email protected]

Take care and trade wisely!

Gianmarco 

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