Daily Plan 8.24.23
Markets Close Higher in Line with Expectations - What’s Next?
Good evening, readers!
Let’s kick off this Newsletter with a recap of yesterday's session.
Nvidia experienced a rally post-earnings, surging right up to my anticipated 500 target.
NVDA - At 433, there's a robust support level as we begin the week, and my preference is to witness minimal downside action here, ideally setting the stage for a resurgence towards 480. Notably, the semiconductor sector has encountered substantial selling pressure, a trend that might be entering an overextended phase which was brought to light last week.
(This has come to fruition in one session which now can spark further upside of a break over 500 and continuation to 520)
Since the last earnings announcement when the price was lingering in the 430s, our stance on Nvidia has been bullish. This optimism mirrors our recent calls on AVGO and LLY. Despite widespread speculation about a significant slowdown in growth this earnings season, company after company continues to surpass expectations. However, it's worth noting that all upward trajectories eventually see a downturn. I believe Nvidia is entering a phase of overextension. Tomorrow, I'm planning on purchasing LEAP Puts on Nvidia, specifically for the 21 June 2024 contracts. I anticipate a considerable sell-off in the upcoming weeks, setting my target at 420, with the potential to dip even below 400. Another stock on my radar is META. Like Nvidia, META seems overextended, and with the recent failure of Threads, it appears ripe for Puts. These options, too, will be set for the 21 June 2024 contracts. I'd venture to say that even TSLA looks tempting for swing puts, especially around the 240 mark. While we might observe a continuation of this upward trend towards the week's end, the broad range for these contracts provides flexibility, and time is on our side. However, it's important to manage expectations; returns from these won't likely rival the astronomical percentages we've seen this week in Apple, which surged by 800% today, or Google, which, having been identified at its low, skyrocketed over 1,000%.
Today, indices exceeded my predictions, with both Emini and Nasdaq posting impressive rallies. Emini surpassed my 4413 benchmark, reaching the 4437 target and subsequently setting a new high at 4475. Meanwhile, Nasdaq shattered the projected 15052, breezed past my 15159 target, and soared even higher post Nvidia earnings, reaching 15360. These predictions, like many before them, underscored my confidence, a sentiment I shared yesterday, in the continued upward momentum.
I posted an update in our Substack chat today, a platform I intend to use more frequently. For those eager not to miss out on my insights, especially regarding the LEAP contracts I'll be venturing into, make sure to subscribe and enable chat notifications.
In the commodities sphere, oil painted a vivid picture early OVN, plummeting sharply to meet my target before making an astonishing reversal, reclaiming almost all of its losses. Gold, conversely, saw a tremendous surge, only to encounter resistance right at the VAH, a prediction I had made weeks ago.Sector Performance (Previous Session)
XLK - Technology: The technology sector led today's market, with the XLK soaring by 1.45%. This indicates a strong investor sentiment and enthusiasm in tech stocks, making it the top-performing sector of the session.
XLY - Consumer Discretionary: Representing the consumer discretionary sector, the XLY saw a significant gain of 1.03%. This suggests a resurgence in consumer appetite for non-essential goods and services.
XLC - Communications: Communications also had a strong day, with the XLC growing by 0.86%. This showcases increased confidence among investors in the communications space.
XLRE - Real Estate: The real estate sector also saw positive momentum, with the XLRE advancing by 0.91%. This hints at a robust landscape for real estate stocks in today's session.
XLI - Industrial: The industrial sector saw good gains, with the XLI up by 0.70%. This points towards renewed confidence among investors in the industrial stocks.
XLE - Energy: Energy stocks showed promise today, with the XLE climbing by 0.69%. The sector's strong performance suggests an optimistic outlook among energy companies.
XLF - Financials: Financial stocks enjoyed a lift, with the XLF increasing by 0.68%. Whether driven by positive news about interest rates or broader economic factors, financials performed well among today's sectors.
XLP - Consumer Staples: The XLP, which represents the consumer staples sector, posted a modest gain of 0.25%. This growth suggests that defensive stocks like staples maintained their appeal to investors.
XLB - Materials: Materials saw muted growth in today's market, with the XLB rising by only 0.11%. This could hint at a relatively flat sentiment surrounding the sector's prospects.
XLU - Utilities: Utilities, under the XLU, witnessed minimal gains, inching up by 0.09%. This suggests a relatively stable landscape for utilities in today's market.
XLV - Health Care: Health care was the only sector to face a decline today, with the XLV retreating by 0.35%. Its decline showcases some challenges or cautious sentiment specific to health care stocks in today's market.