Here we are! Last trading day of November, and today after the close we complete new monthly candlesticks. I’m going to share some notes from the December Almanac. #3 S&P 500 (+1.5%) and Dow Jones (+1.5%) month since 1950, #3 Nasdaw 1.6% since 1971. 2018 was the worst December since 1931, down over 8% Dow Jones and S&P, -9.5% on Nasdaq. Presidential election years Decembers rankings: #2 Dow, #3 S&P, and #5 Nasdaq. Last trading day of November, S&P down 13 of last 21. First trading day in December, Nasdaq up 21 of 32, but down 8 of last 13.
One other thing to note, in December, we get investors taking advantage of Tax Loss selling. This means, any positions that investors have that have underperformed and currently showing losses, they are likely to cut those, to help offset the capital gains taxes from their big winners. This can push weak stocks lower, and present some buying opportunities at some point. The sector that I’m looking at that might get sold off into end of year is retail stocks like JWN (Nordstrom), ANF (Abercrombie) , GPS (Gap). These stocks have more than doubled from their lows, but still well below where they were trading last year. The options market in alot of these names are very illiquid (not many options being traded) however JWN has a decent amount of volume going on in their options chain so I may look to get short on this one.
Weed stocks are getting love again, I’m personally not playing them. I don’t do well trading them, so part of trading is understanding what you’re good at, sticking to that, and staying away from the rest.
We’ve got an interesting Earnings week with CRM, ULTA, DOCU, ZM and more reporting this week. A little bummed I had a calendar reminder in my phone to buy ZM Friday into today for their earnings hype and its up nicely pre-market. ZM could head to $500 level. I generally stay away from earnings gambles. After earnings always presents great trading opportunities without as much risk.
TSLA – (caution up here!) – Full disclosure: I am short TSLA going into today. Last two weeks have been incredible playing TSLA options. I was super bullish up until last Friday where I exited my last long position and then got into a short position. I believe TSLA will continue higher well into the future, but for a short term perspective (one to two weeks) I would expect us to take a break in this price action. We’ve made a measured move of $200 as of this writing in premarket (8:31 AM EST), and tapped $604 as pre-market high (so far). Last week I was mentioning the big $600 level being the target, well here we are! Congrats to all the long holders of TSLA stock! Now, the question is do we hold up here? or give back some of the gains and try to consolidate for the next move? My best guess is the latter, but I’ve learned not to be stubborn and won’t hold a losing position. If you’re a long term investor, TSLA has not given you any reason to sell for over a year.
Key levels to watch and set alerts on:
$604 – pre-market highs of today – for bulls, this is the level to break above to continue the ascent higher. Over this, $610-$615 comes into play
$599.06 / $593.60
$585.76 – Friday’s close (shortened trading session) -this in my opinion is one of the key levels to hold for bulls. After that, $578.45 must hold or else we begin to form a new short term pullback (below is a 15minute chart as of 8:50Am EST – the light grey areas are pre and post market, the black areas are during trading hours)
AAPL – (potential long swing into year end) – I’ve been watching AAPL and Nasdaq last few weeks and very recently we are seeing some more money rotation into tech stocks. They were being ignored as Airlines, Travel and Retailers were running hard on vaccine optimism. This is also money/sector rotation as those stocks were hit hard during the Corona crash and many still have not recovered, which could lead to some tax loss selling? (as I mentioned above)
Key levels to watch and set alerts on:
$117.49 (Friday’s high) and $117.62 (last week’s high) – above these levels opens the door to a nice move to $120.99 and $121.99 to break after that
$116.59 (last week’s closing price) – for bulls, they want to see previous week’s price serve as a level of support. It can dip under but it must not stay under for long.
$115.04 – under this level AAPL would signal that it’s still weak and not ready for long momentum (less likely scenario IMO) – (Daily chart below via Tradingview.com)
QQQ – (continued long momentum) – similar to AAPL, I’ve been watching this sector for signs of money rotation back into tech stocks. This fund’s biggest holdings comprises of AAPL, MSFT, AMZN, TSLA, FB, GOOGL, NVDA, PYPL, CMCSA. So if you see QQQ doing well, then the stocks within the fund are likely outperforming, so if you wanted to, could play individual names within the sector. We played this one last week and booked net profits of 10-30%, selling a bit short of the expected move to QQQ at $300 which was net 75-90% potential profit gain on that alert.
Key levels to watch and set alerts:
$300.17 – Friday’s high of day – above this opens the door to an all time high retest of $303.50 – over this all time high level I’m seeing possible fast move to $310 (not today, but sometime within next 2-3 weeks likely)
$297.90 – Friday’s low of day (shortened trading session, had a gap up which held for now) – below this we have $296.94 / $297 area that bulls want to see hold for higher tech prices
$294.59 – below this level signals caution for tech stocks. going into December and being that tech has been trading in a range / setting up for it’s next move, I don’t believe it’ll get this low