October 17, 2020

STOCKS – XOM, MU, PFE, AMZN

Macro – SPY, QQQ, XLU

Mike’s Reading The Markets (RTM) Premium Content – NOW WITH A 2 WEEK FREE TRIAL 

Macro Headlines: 

• Sector Rotation Turning Defensive
• Biden’s Lead Is Narrowing Over Trump
• Globally Markets Giving Warnings Signs

• Technology Options Trader Returns- Morning

Stock Specific:

• Exxon’s Stock May Be Heading For A Reversal Of Trend
• Micron’s Shares May Jump 9%
• PayPal May Surge With The Market, But Not Without Risk
• Intel’s Stock Is Breaking Out

Fabulous Friday wasn’t so fabulous, with stock pulling back in the final hour of trading. I think it had more to do with options expiration than anything else. We have typically seen pretty big moves in the markets in recent weeks, and much of that activity has been due to option volume.

Again, a reflection of the options expiration date.

NASDAQ 100 (QQQ) 

The Qs were hit hard in the final few minutes of trading. It resulted in the ETF falling by around 55bps, finishing the day right on its uptrend from the September 24 low.

S&P 500 (SPY) 

It was the same scenario in the S&P 500. 

Amazon (AMZN)

The big hit appeared to come from Amazon, with the stock falling 3.6% in the final 15 seconds of trading, on a stunning 153,000 shares. That is a vast nominal block of stock, about $500 million worth. That wasn’t even the closing cross and before the cross. So either it was someone who failed to get in on the closing cross and just needed to be finished at all costs, or it had to do with a dealer that was unwinding a hedge in the stock.

So let’s chalk up the final hour of trading to Friday, potentially as a Freaky showing that hopefully doesn’t repeat itself anytime soon.

Utilities (XLU) 

In the midday, I did note that there was a bit of a defensive tone to the market on Friday. The XLU was up over 1%, and it could be that yields are moving lower. But it could also be that the lower moving yield is starting to make some investors nervous, causing them to take a more defensive stance. It appears the XLU may still have further to climb. (Premium content – Sector Rotation Turning Defensive)

The German 10-year continues to drop, which is because Europe’s situation around the virus and lock-downs is growing worse.  (premium content – Globally Markets Giving Warnings Signs)

Exxon (XOM)

I noted that Exxon might finally be turning the corner. There was a rather sizeable bullish bet placed in Exxon on Thursday, with the open interest rising on Friday. Additionally, we can see that the stock has broken an uptrend, and the RSI is starting to shift. (premium content – Exxon’s Stock May Be Heading For A Reversal Of Trend)

Apple (AAPL)

There was also some bullish betting in Micron earlier this week, which led me to believe the stock could get ready to move higher towards $55.50. (Premium content – Micron’s Shares May Jump 9%)

Pfizer (PFE)

Pfizer has been moving higher as well, and with a potential for a vaccine from the company coming relative soon, the stock is getting close to finally breaking out at $38.25. The RSI and momentum are trending more positively.

Have a good Friday. 

-Mike