Tail of 2 Days

Please check out my YouTube channel for my audio description of the market this week.  

After the market close on Tuesday, Apple announced a lower revision of

their earnings expectation for the first quarter of 2019. This is crazy since we are about to enter earnings season for fourth quarter of 2018. Regardless it drove the market down hard on Thursday with the exception of Netflix and Verizon.

Apple cited reduced sales in China and the trade war having an impact. I was surprised that Amazon and Alphabet (GOOGL) weren't down more. Amazon just broke below 1500 and Alphabet didn't go below 1022. I felt this was a strong sign.

China's market went up on Friday with the expectation of trade talks sooner than later. It drove the US markets up from open and they rallied more after Fed President Powell spoke with Janet Yellin and Ben Bernanke. The market heard positive news that they are reading the market and inflation is not rising. They don't believe that rates will increase more, but they are all wrong.

Inflation is muted because of the huge drop in oil, gasoline and other commodities. As they rise, they will show in I is real as well as s full employment will drive up the price of goods. The Fed will raise rates as planned 2 to 3 times this year.

With more rate increases, the market will experience more volatility. The

best case for a sustainable rally in the market is from great earnings, larger sales and a trade deal with China. Sales will work themselves out as Americans will experience the largest tax reduction and spend that money.

Trading: Thursday was such a negative day that you could have bought Puts at open or waited for everything to come back near the open price to buy Put Options. Selling at the end of the day was best.

Friday proved to be completely opposite of Thursday and Call Options were the best. I traded QQQ on Thursday and Home Depot on Friday.

Trading Alphabet This Week

With the Federal Reserve scheduled to raise interest rates on Wednesday, this was going to be an interesting week for stocks. Everything is been very depressed and poised to go up. Alphabet moved up on Monday but failed to pass 1060. This proved to be a substantial area to keep in mind trade in for the rest of the week. I actually did not trade alphabet on Monday, but utilizing what she realized from Monday can help set up your trades for the rest of the week. The market has been up and down and pretty much flat by the end of the day for the past week and a half. Alphabet has followed the market movement.

On Tuesday, Alphabet ended up going up cautiously, but failed again to pass 1060. It went straight down from there. There's big money to be made if you can be patient for it. What was really interesting is how it bounced off of 1040 a couple of times on his way up to 1060. Once it got to 1060, it failed to go higher and went straight down slightly passed 1040. This is the optimal opportunity was to buy puts when it was at 1060 and sell them when it hit 1040.

Wednesday was unlike other days where the Federal reserve announced their interest rates as everything went straight up. Alphabet actually went up and hit 1075 where it failed like the prior

couple of days at 1060. it appears that most of the market was expecting that the Federal reserve would not raise interest rates war have favorable communication regarding a stop to raising interest rates. At 2pm when the rate was announced, everything went straight down and then it went up as Fed Chairman Powell began to speak. At that time he announced that they will be more data dependent and will probably have two more rate hikes in 2019. That is when the market fell further. But as you can see the chart of Alphabet, it bounced off 1019 and went all the way back up to 1040. This look very similar to last Thursday.

On Wednesday afternoon, Alphabet went back down to retest that bottom and stopped at 10:24 where it went back up to 1040. The stalking to the day slightly lower, but looks poised to rebound on Thursday and go higher. I believe when the analyst breakdown the words from the Federal Reserve, the market will have a nice balance from being over sold on Wednesday. That's not to say that it is going to continue going up all day. I would expect the second half of Thursday and most of Friday for the market to be down.

Let the Mergers Begin!!!

• The biggest news for the day was the Fed Funds Rate increasing .25% and Fed Chairman Powell's speech about the state of the economy. The rate increase was expected and the market traded like it through out the day. Most things were up, dropped at 2pm when it was announced, went up during his speech and dropped hard for the last half hour of the day. Based on this reaction, I would expect the market to drop a little more on Thursday and turn around mid day
• Boeing dropped sharply more on news that an airline was considering dropping their airplane order. This should not be a big deal as they have a long list of customers waiting for new planes. I would expect to see Boeing move up for the rest of the week as it was over sold.
• Tesla was up and down for the day and back up again. After the market close it
  
  was announced that Elon Musk is going to buy more shares. He is already the largest shareholder and he will own around a third of Tesla. I would expect to see shares jump on Thursday on this news.
• The banks were down in the day and were the first to spike when the interest rate was announced at 2pm. They were also the first to fall in the last hour of trading. I would expect to see them lead the way in the next couple of days.
• Home Depot was down sharply at open and fell below 200. When ever this happens it should be bought with Call Options. It still ended the day down, but still above 200. Home Depot typically has great Thursday afternoons and Fridays. 
• SunRun was up again breaking through the 14 mark. Its PE ratio is low and has more run to move up under the sun. lol
• H&R Block was a great buy if you got it at $24 or less. They moved up to 24.70 during the day which was good movement for this stock that typically has little movement. Like Macy's and L Brands, this was a great buy based on earnings, dividends as the depressed forecasted earnings drove it down yesterday afternoon. I would expect to see it back to the 30 range when a couple of analyst upgrade it in the next couple of weeks. I would not purchased Call options on it unless they were 2 months out. Given the low volatility, they could be purchased at a great price.