This is a quick note for readers. I am on hiatus through June 15th. Over this time, the Fed will issue its next proclamation on monetary policy on June 13th. The tone should be a key tell as to whether the current dip in tech should be bought aggressively and now or whether it should be bought in bits and with patience.
My strategy on Friday was to focus on call options on Apple (AAPL) and the NASDAQ big caps through QQQ. That will continue to be my strategy until some stock specific signals emerge with the other big cap tech stocks. For example, Facebook (FB) may have already bottomed with a bounce off its support at its 50-day moving average (DMA). I already have a hedged position in Nvidia (NVDA). Overall, I remain encouraged by the relatively healthy trading action outside of tech and especially financials.
Having said all that, I took advantage of the rapid return to an extremely low level of volatility to load up on call options on UVXY (as a small hedge). Just as I did last week, I plan to take profits very quickly if they come given my outlook for an overall low volatility summer.
I hope my observations come Friday may be too late to take advantage of the best opportunities, but I expect it will be I plenty of time to map out some fruitful options for the rest of the summer.
And of course AT40 (T2108), the percentage of stocks trading above their respective 40DMAs, will be the starting point of analysis. I am still cautiously bullish.
Be careful out there!