Welcome to another Sunday Scan with Chris and Stan. We have a lot of great topics to cover so let’s get right into it.
Video Scan and Game Plan
Chris’s Market Thoughts
Volatile week in the general market. We saw the shift from a low VIX environment to a higher VIX environment with so many key events and headlines. Inflation data came in hot, rate cut expectations got pushed back, and now we need to see how Powell and Fed members want to proceed.
The war headlines out of the Middle East are also keeping markets on edge.
What we tend to see in an environment like this is big trend days as VIX winds up and then unwinds a few days later or chop days where it’s somewhere in the middle.
Finally, there are market outflows from tax day as people take profits in positions to cover taxes, and that is a repeated trend year after year.
A key for me in this market is to be really disciplined about picking trades, especially with options. You don’t want to force trades if they’re not clear or if they don’t have the proper risk and reward profile. I also need to be patient and maybe look at other strategies if I’m not finding something clear in my normal trading routine. Small caps are moving well, so I may start to be more active there.
Last week, gold had a nice run, and GDX was a solid way to play that trend. We had an unwind in some commodities on Friday, so maybe they consolidate for a while before continuing up.
Banks are on watch after JPM reported earnings and fell. The rest of the big banks report this week and that should be telling on where financials are at right now.
Stan’s Market Thoughts
The market in small caps has been on absolute fire these last couple of weeks. Probably most I’ve traded in a few years. There have been multiple opportunities per day with various strategies/approaches to take and trade. From the types like DXYZ RENT to something former like MSGM LASE or even something sub a dollar like TPET, which was a great long idea I know some took, but then offered a great short off the blow-off move on Friday.
We also saw a lot of trappy action behavior intraday on some tickers like AUUD, MDIA, and CADL. You have to be aware of that price action and either avoid or be a trader (this week’s concept, will discuss during trade recaps). Anything front side will require proactive covers until sentiment shifts.
We’ve seen some moves where they run it pre-market, let it fail off open, then linger until late afternoon and squeeze into close ( ADIL WAVE). Not many all-day fade setups that I have followed, maybe some that just don’t squeeze EOD, but remain flat into close. Most action has been intraday.
Nice unwinds across some of the names we’ve discussed previously, CXAI vs that 6-6.5s, CGC continued fails, CVNA back to that key 75s level, etc. The war headlines spurred some movement in the oil sector – we saw former names like INDO HUSA react and get some volume/action. Names like IMPP NINE GBR will be on watch in the coming week with INDO HUSA and oil sector overall.
This week’s concept → Be a trader. When the market offers so many opportunities on a daily basis, there is absolutely no reason to stick around if the trade is not working. Even worse would be to try and fight it. The cost is not only a bad trade, but the focus/time it took away from the actual good trade that was just around the corner is where it stings most. If you react to some sort of a swipe or exhaustion move, and it doesn’t break below the key level, you have to adjust and, if needed, move on. We are in a volatile market where being wrong or being right gets magnified. This market can also be really forgiving if you respect price action. Focus on the good opportunities and be quick to adjust when what you expect is not what you see.
Chris’ Main Watches
JPM I want to see how this recovers after the big earnings sell off. If it soaks and shakes it off then that’s a tell. If it stays heavy and so do other financial names then that is also a tell that the sector needs to cool off and may have some pain ahead.
FCX had a dip on Friday so looking at markets and commodities this week there may be a spot to enter a call position but not forcing it.
GDX similar thought. Gold has moved a lot so it may need to consolidate for a bit before continuing.
AI names like NVDA / MU for strength and AMD for weakness
META I want to see how it acts after this consolidation.
CVNA at a key point. Congestion range testing the edges. If the market gets ugly then this can really unwind, but if the market perks up then this will likely just go back to the other end of the range.
Stan’s Main Watches
TPET– any shove vs .57-.60s+ would be of interest and join pops that fail. Also .52s were key throughout the day on Friday, so will use that level for more confirmation. Ideally low/sub .4s
INDO HUSA + oil sector– INDO interested vs 5.7s, HUSA vs 2.5s, but will need to monitor overall sector move/news. More on Monday morning on broadcast.
CADL – Any exhaustion move 7.2-5s+ that fails would like to join pops for low 5s later on
CVNA – will watch how we react on this 75s level, but if market gives away or continues to stay heavy, this may offer good opportunities. Not interested in chasing .50-.80cent flush, I want to see it confirm/stay heavy vs key levels.
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