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DrosNotes - 08.19.2018 - Stock Market Outlook


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Some of my favorite action, both in money flow divergences as well as unusual options activity. Even useful for non-options traders, as most of this data correlates to equities as well.

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DrosNotes - 08.19.2018 - Stock Market Outlook

  1. 1. DrosNotes August 19, 2018 DROSNOTES | 08.19.2018 | RECAP AND WEEK AHEAD First and foremost. Elon isn’t going to jail. The tweet in question is worded as such. 1
  2. 2. DrosNotes August 19, 2018 Notice the “considering” word. That mitigates the entire sentence which even a cheap lawyer (of which I’m sure he retains the best) could defend in court. Because it means he’s CONSIDERING taking taking the company private and CONSIDERING that price per share….and he’d CONSIDER it if the funding is secured. An important point to keep in-mind is that he posted this after the Financial Times posted an article about a Saudi fund considering taking on a major stake in the company. So i believe it was mitigation. Perhaps there are ongoing talks which the article’s author revealed that Elon and those he is in possible talks with didn’t want such things revealed. More on that here. SO WTF is going on with the markets? I wish I could give you a straightforward answer based on some of the evidence we’ve seen so far… but I can’t. Anyone who isn’t on the “inside” who claims to know what is going on is just lying to you. We’ve never seen a central bank inject so much capital into the system and then withdraw it. We are officially in unknown waters. But I don’t see a mega crash coming anytime soon. The Fed wants to unwind those bonds slowly as to not crash the price of them on account of their own selling. That would lower the price of the bonds and the Fed, just like any other investor, doesn’t want to lose money. That’s why dark pools exist. Ever been to a treasury auction? I haven’t, props if you have; but the takeaway of being a part of one doesn’t matter. The past few auctions have seen treasury prices spike and the markets turn down. What I can tell you is what I see and possible buying opportunities. [Note this list is partial, members of my room get a more thorough list as well as their questions answered promptly….still free: - just say hello in the welcome room and I’ll grant you the privileges. Now some stock picks: $TSLA - The bottom might not be in yet but I think this is a great spot for LEAPs or equity. It is under the price it was when Elon made the tweet pictured above; and more positive evidence of his proposition being unleashed have been confirmed. I like anything around 380-400 strike price on calls, out to at least October. Based on Money Flows: 2
  3. 3. DrosNotes August 19, 2018 Bullish: - $AMZN - Friday saw the stock decline, but the money flow was at +155.51 million bucks. - $MSFT - Price declined Friday, but the money flow implied buying with a 144.87 million money flow accumulation. - $UNH - Price down, money flow accumulation +127.03 million dollars. Bearish - $AAPL - Price up, money flow accumulation -693.2 million dollars. - $ACN - Price up, money flow accumulation -124.53 million dollars. - $AMGN - Price up, money flow accumulation -90.43 million dollars. - $BKNG - Price up, money flow accumulation -153.88 million dollars. - $CVX - Price up, money flow accumulation -162.76 million dollars. - $EL - Price up, money flow accumulation -90.79 million dollars. - $GRMN - Price up, money flow accumulation -94.60 million dollars. - $HD - Price up, money flow accumulation -108.29 million - $NOC Price up, money flow accumulation -113.15 That’s it for this version of DrosNotes… The data above and the top money flows below are via SuperStocks. 3
  4. 4. DrosNotes August 19, 2018 So that’s some money flow based stuff. Here’s some options-based picks. The “drosFlow” (my favorite bets) on Friday: - $QQQ JAN19 $187 Cs - while towards bid-side, I like this trade because the market feels like it wants a correction, and that expiry gives you a chance for upside even through a short pullback. I wouldn't buy a ton of these. But a few wouldn’t hurt. - $XLE 31AUG18 (Weeklys) $72.5 Cs - a bit riskier with the short expiry but oil seems due for a pop…this would capture that somewhat safely and with a higher % than $USO. - $IRWD NOV18 $20 Cs - time is on its’ side and i love the chart. - $NGF OCT18 $60 Cs - very aggressive order placed, .15 spread and he just hit ask with no worries. 4
  5. 5. DrosNotes August 19, 2018 As always, trade safe. You can never know what the big money is doing with trades like any of the aforementioned. If you have any questions hop in the room or message me StockTwits or Twitter. The room gets the fastest responses. The above are observantions and not trade recommendations. Trade at your own discretion. Cheers, -Dros www, 5