MSFT and GOOGL save the market from inflation

Daily Pit Stop [fstp, logo, header] April 28, 2024 [volman, vol man, vol,] MSFT and GOOGL save the market from inflation  Hey OP Crew, AG’s alter-ego Vol Man here with my weekly analysis. As usual, I will start with my last forecast… [If some of my Option Volatility Jargon is vexing, our Glossary is here.]( Last Week: “VIX closed in Zone 3 but did not hold new highs. This is a healthy selloff for now but setting up for a market that is more back and forth. IV is skyhigh relative to underlying close to close volatility so making money buying options in SPX will be a lot more difficult. Big index trades I will need to take smaller profits fast and it is a lot more work. I expect the same for SPX this week with back and forth trading. The easy run up is done for a while with tech getting smoked. A pullback is healthy after a wild 6 month run up and traders took stocks down quickly that had run up. Now I need to see and the market needs to see good tech earnings at the end of Apr and into May. The low realized volatility to me means stocks will keep the same pattern until the earnings picture adds the good news traders need. The bigger item is the low realized vol and the flatter VIX curve means VIX can get smoked easily on the whiff of a sentiment change. I don't think it will happen this week. I am holding a lot of VIX puts in Weekly Profit Cycles and it looks like I will need another week at least before they turn green.” Well guess what, Alphabet Inc (Ticker: GOOGL) and Microsoft Corp (Ticker: MSFT) saved the market from the poor inflation numbers. Most of my WPC VIX puts are green but one strike is not. Meta Inc (Ticker: META) and poor GDP/Inflation news sent stocks tumbling Thursday only to fully grasp the highs of the week by Friday.  My prognostication was pretty darn good. Both SPX and VIX had decent swings this week. SPX finished on the highs with VIX finishing on the lows. Even with $1 Trillion in extra spending per 100 days, 1.5% GDP growth is pretty sad and you don’t hear the phrase Bidenomics much anymore. That does not mean that tech companies cannot thrive. Inflation hurts Main Street small businesses and we are seeing the results in GDP. [vol] SPX daily price action over the last 30 days SPX is down 2.5% from the highs but sigma vols are down to two week lows. Not near absolute lows yet so while I think SPX has got past the Middle East, interest rates and growth are no bueno. That also equates to less upside moves and lower volatility. [vol] SPX sigma (Vol per term average) levels over the last 30 days. Sigma Vols dropped a bunch and likely would drop more if the FOMC was not set to drop their latest bombshell on Wednesday at 2pm ET. The condition of the current market is the algos are set to spring on FOMC notes. I might not like it but that is what it is. The 10-day realized vol is up to 13.31 form last week just as VIX predicted more movement. If SPX can maintain the rally until Apple Inc (Ticker: AAPL) on May 02 I would be surprised. Most of the other earnings reports were just meh. [vol]  SPX realized volatility snap on Apr 19 2024 OP VIX Zone Watch VIX ZONE 1 9-13 VIX ZONE 2 13.01 TO 17.99 we are here VIX ZONE 3 18-23.99 we were here VIX ZONE 4 24< The front end of the curve dropped out of backwardation and into a more normal contango. Future premiums are a little close to VIX cash which suggests VIX could drop up to 1.5 points next week to get back into line. [vol]Closing VIX curve, Apr 26, 2024 The change from backward to contango was palpable and most of the parabolic style risk came off. Traders are quickly looking at the summer volatility patterns of lower IV with an over 3 point drop. [vol] Closing VIX cash and curve, Apr 19, 2024 Basic Vol 101 on our [Option Pit YouTube channel](. [vol] VIX 30 day chart with 1 min candles Inflation is going back up as anyone who listened to Milton Friedman would tell you. At least we know what kind of spending over the last 4 years kicks it into high gear. Bond yields are higher and for most part stocks don’t care. Interest rates were higher in the 90’s and we did ok. However, Uncle Sam had 20 Trillion dollars less in debt and to be honest I don't know what US Gov is spending it on. At some point it will matter but for now rates are going higher and stocks adjust. We have a flat market until the Fed on Wednesday, AAPL could surprise with sales growth. That good be the 1 - 2 punch traders need to get to 5200. Implied Volatility is looking for 100 points next week SPX and I think it will get it. Unless AAPL is horrible, expect 5200. [Weekly Profit Cycles is opening for a quarterly subscription if you want to learn to trade VIX/SPY exclusively. I am 11 for 12 for Opens in WPC.]( So getting paid to own SPY puts it in an up market is something anyone can learn to do. Let’s Go - AG  [logo, pit profits] Want to find YOUR winning fit? Give our Customer Care Team a call at [1-888-872-3301](tel:/1-888-872-3301) Monday-Friday from 9 a.m. - 5 p.m. EST. Or email them anytime at [support@optionpit.com](mailto:/support@optionpit.com)  [logo, fvix, header,] Scenarios Where We Move Up...And Scenarios Where We Move Down  Hey Traders, In today’s video, we’ll cover: - Scenarios where I see us moving up in the market - Scenarios where I see us moving further down - Earnings that need to impress [vix]( [Click here to watch the video!]( - Mark  [frep] Ticker of the Week: Ford Motor Company (Ticker: F)  Hey Traders, The world was down on Tesla, the stock had dropped from a high of 261 at the end of 2023 all the way down to a low close of 147. It popped on earnings…not because they were great…because they laid out a plan for the future. GM on the other hand had already had a nice move higher and still had a strong move on earrings. Ford…it reported and beat on both top line and bottom line… I thought this week we could get the team to break down an auto maker…the one I feel is most interesting in the next year. [Read on to see our analysis.]( - Mark  [fpri] Right on Cue … Stocks/Bonds UP Dollar Down  Hey Income Hunters, On Monday Power Income’s headline was [Cover shorts in stocks and bonds]( and sure enough we have had a great bounce off last week's lows. Bonds are still sitting near the lows but the US 2-year auction resulted in the first stop through the auction level of the year. Notice the drop in yields on Tuesday heading into the auction.  [fpri]( The drop in yields came on the largest auction for 2-year securities ever! I think rates on the short maturity Treasury securities could have more to go. [We will take a look at why in the full article here …]( - Bill  [fpip] The Cup and Handle Hi Shoppers, Welcome to the First Edition Sunday Special of [Profits in Pumps](! I send out [Profits in Pumps]( Wednesdays, Fridays, and Sundays. We are going to change it up a bit with a new Sunday Special Edition which will still have candlestick and technical analysis lessons, quotes and anecdotes, everyday observations and recommendations, and of course a new trade idea. The Sunday Special Edition will just be beefed up a bit. Perhaps with a more thorough lesson, or an exact option to trade, or stocks to watch for the week. Today is on the cup and handle formation because I am seeing it happening in two stocks. This formation was introduced by William O’Neil in 1988, author of How to Make Money in Stocks. It is a continuation pattern which means it is found in an existing trend and signals that the trend will continue in the same direction. Here are the qualities of the cup formation: - A longer and broader base is more bullish - The right hand side does not have to match left hand side at the top of the cup - It can take one to six months to form the cup - The volume is usually lighter at the base and picks up as it rallies back to the old high The handle is then formed on a pullback or consolidation before the breakout: - A pullback is caused by buyers at the resistance level scratching & taking their money off the table to try and break even - The handle should remain within the upper ⅓ of the cup formation - It can take seven to twenty eight days to form the handle A short term target price coming out of the formation is calculated by taking the distance between the top and bottom of the handle and adding it to the top of the cup which is the breakout point. A longer term target is derived by calculating the distance between top and bottom of the cup and adding it at the breakout point. Your point of entry occurs when the handle has been created and the stock busts out of that resistance level at the top of the cup. Use the lower end of the handle for your stop loss. Here is an example I called out in [Apple (TIcker: AAPL)]( that was completed or realized in May 2023.  [ded]( [You can read that article here.]( [Continue here and I will reveal the two stocks I am referring to.]( - Licia  [fprm] Meet Your Money Maker!  Hey Influence Traders, It must be Christmas on Capitol Hill. The War Aid bill that’s been in the news passed the Senate. The President immediately signed it. The Bill provides $95 billion in aid to Ukraine and Israel … and Taiwan! $95 billion, with a capital B! Wait, Taiwan? How did they slip into the deal? The majority of the money will go to Ukraine. And $26 billion will provide wartime assistance to Israel and humanitarian relief to Gaza. But the remaining $8 billion will go to Taiwan. The money is intended to counter Chinese threats … and to shore up our computer chip supply chain. The rising fear of Chinese aggression in the South China Sea puts a spotlight on our need to shore up supply chains. And that requires mining. [Let’s Dig for Some Profits!]( - Frank Don't miss when our traders go live! Get an alert everytime we open the live rooms to all of our readers for free by selecting the calendar you use below. Add Option Pit Live Events to Your Calendar [Apple]( [Google]( [Outlook]( [Outlook.com]( [Office 365]( [Yahoo]( [glossary, logo] There are plenty of terms in the trading world that need explaining. The Option Pit Glossary is here to help. Today's phrase is:  Synthetic Put- Using 1 call and 100 shares of stock to create a similar risk profile for puts. Long synthetic puts are short stock and long calls and short synthetic puts are long stock and short calls. 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