Options Expiration Hits Equities
MEGA8s Correction
Ok before we get into today’s early action, we had a correction on the MEGA8s, we changed the META ending day price and net change on yesterday’s post, we apologize for this inconvenience. Also the hedges were all too far away and we will have to wait for an up tick as we never put hedges on in down move days. We suspect next week we will target the 505 call area. Anyway here is yesterday’s MEGA8s data and the grouping did not close above the $18.120 Tn high. Tesla was the groupings biggest loser:
While we are on the MEGA8s here is the current market cap chart of the grouping:
If this does indeed start to lose its election FOMO, we should expect the following charts to exhibit divergences from their total market cap highs. We will keep an eye on which components are starting to lead the retreat:
Tesla and Google are currently leading the retreat!
Same goes with the above chart, we should start to see the Gold and Red lines diverge.
Ok let’s move to today’s action thus far with equities getting hit with Dec. Nasdaq 20,500 -511.75 or -2.4%:
The Dec. SP500 blew thru 6k and now down at the 21p VWMA on the daily, 5896 -82.25 or -1.4%:
December Crude is also -1.1% and a move below $67.00 should see stops run:
Moving over to equity land and maybe Microsoft is confirming what we already expected, that the big dogs are monetizing and selling into all this retail FOMO, which allows the prices of things not to sink to quickly. However what can’t be hidden is the overall trend. No matter how well the sell side algo’s execute the big dogs big chunks, ultimately the price action displays the true direction. Case and point is Microsoft, despite the election FOMO this thing continues to look like its about to tumble and $411 is the real test on the weekly!
The same thing can be said about META, honestly buying here and you are taking major downside risk, and no I do not care about your time horizon, the Zuck has sold about $18Bn worth this year!
Bezos what, just dumped billions in AMZN so far this year ($13Bn)? Well look at the stock price, barely off the highs, but selling into retail eventually new buyers will be put to the test and we are getting close to that level, lets just say $202 is massive:
Ok, so like we warned in yesterday’s Podcast, the selling was being absorbed but for how long and today we have our answer! Anyway here are yesterday’s settlements:
Let’s just see how today washes out, but right now, its risk off into the weekend. Also keep an eye on Big Pharma, we expect the new administration to bring a big stick of regulatory changes to this grouping and we don’t think risk of that has been properly quantified yet, however Pfizer (PFE) as of this week will now be lower than their post Covid Low and you know what, they deserve it, maybe they can cut some of their advertising budget to offset some of these losses!
LLY has had a nice run often cutting into the tech heavy MEGA8s, but now -22.6% off its highs and a breach of the $745 area on the weekly, well let’s just say gaps will be closed on the downside:
Alright, that is it for your daily dose, we will be back this weekend with the numbers, the data and the insights. Hopefully we arouse your speculative impositions to start digging further into these subjects. We are excited for the start of the new year, our CTA is going to offer a new trading program with Bitcoin futures included and a unique opportunity for investors to participate in an alternative asset strategy which should complement and be an integral part of everyone’s portfolio. All to often people focus on traditional buy and hold and in doing so, miscalculate actual directional risk bias, this is where alternatives can come into play. Alternatives offer a higher risk, yet higher reward potential and our managed account program is a long/short diversified program that tries to minimize directional bias via cross market sector allocations.
For any interested parties feel free to visit our CTA website at
https://magnelibra.com
You can also contact or make inquires directly to our introducing broker Capital Trading Group by contacting Nell Sloane at nsloane@capitaltradinggroup.com
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