The Market Pulse: More Headwind than you Could Imagine

By Ardi Aaziznia  |  
Bi-Weekly Market Updates  |  
Nov 24, 2021
Share
«  Blog
«  The Market Pulse: More Headwind than you Could Imagine

Hello all,

I hope you had an amazing weekend. We are getting closer to the end of the year and historically, December and November are great months for the stock market. I am sure you have heard of the  “Santa Claus Rally.” Below is the S&P500 return based on seasonality. As you can see, both December and November have been stellar months for the market.

However, I would be more cautious this time around as there are many headwinds facing the equity market.

1.Sticky Unemployment

While there are over 10 million job openings, which have yet to be filled, unemployment is sticking around 5% and people are quitting at record high numbers. Chart below shows the percentage of people quitting their jobs. This number is much higher for smaller businesses.

2.Sentiment at All Time Low

Consumer sentiment is at 10-year low! Yes, even lower than 2008. This could be attributed mostly to the high inflation numbers.

Option Trades for the Week

Keeping in mind the headwinds, I am playing it more conservative in the market. No short strangles or risky trades yet. Implied Volatility is still elevated and risk has to be measured. Below are my current position for the week:

  1. TNA Buy writers: sold $115 calls for end of the week. Average price of 100 shares is at $107
  2. B debit call spread expiry February 2022 $350/$380. This is a push for FB back to all time highs. Stock sees the metaverse as a catalyst and has been oversold on several technical indicators.

Positions I am looking at:

  • Amazon condor: a condor on Amazon for the end of the week could be in play. IV is coming down, while still above historical levels.
  • Sundial (SNDL) $1 calls expiry for January 2022. Company announced $100 million share buy backs last week, that could push the stock above $1.
  • Tesla credit spread: IV is elevated and $1,100/$$1200 credit call spread could be a high probability play.

Tweet of the Week

Of Course you can not start this week without noticing the tweet storm between Elon Musk and Bernie Sanders. However, I want to focus on the tweet below:

Truth is while Elon has been leveraging his stock position and borrowed against his shares for the past couple of years to minimize paying taxes, you can not expect to balance the budget without cutting spending. Yes, US tax revenue has to go up, however the other side of the equation is spending which has to be under control.

One Last Thing

I published an article on why dollar cost averaging is a big lie! Feel free to check it out here in my personal blog.

As always, please email me if there are any questions or concerns,

Ardi

Subscribe to our NEWSLETTER

This newsletter is joint with our sister community, Bear Bull Traders.

You may receive emails from Bear Bull Traders.

(We hate spams, and we never send any.)

Peak Capital Trading

Peak Capital Trading was formed in 2020 as a proprietary trading firm based in Vancouver, British Columbia, Canada. Founded by veteran traders and Wall Street executives, our mission is to work with a diverse pool of Canadian and international traders in order to establish the leading firm for trading US stock market equities.

Stay Connected
Quick Links

© 2020 Peak Capital Trading. All rights reserved.

Disclaimer

Peak Capital Trading is a registered firm in British Columbia, Canada. It is not a broker dealer or licensed to give financial advice to investors or traders. Peak Capital does not solicit or accept any money from third parties or interested traders for the purpose of trading or investing on their behalf. Traders only trade the firm's capital and Peak Capital is assuming initial risk of losses for all traders and does not accept the capital of its traders.