January 8, 2025
Scheduling Note and Market Update
Before I dive into the market, I did want to note that the Stock and Options markets will be closed tomorrow in observation of the National Day of Mourning for President Jimmy Carter. That means there will not be a Daily Order Flow email sent Friday morning.
In terms of the market, early January is living up to its rocky reputation as nearly every day this year the bullish/bearish narrative has flip-flopped. And if we were prisoners of the moment, based on yesterday, which was an ugly day for the market, led lower by the Nasdaq and growth stocks, we are now in “concerned” territory.
That concern is partly why we sold our PLTR and ONON positions yesterday as growth stocks were under a ton of pressure, somewhat led by PLTR, which broke below 70 and is lower again today. We may revisit PLTR at some point in the future, but for now at least the bears seem to be in control when it comes to this AI play.
The general worry for the market right now is interest rates, which have been a freight train higher really since the Federal Reserve cut interest rates in early December. In fact, yesterday the 10-year Treasury yield closed above its April 2024 high and is at its highest since November 2023. Yikes!
So with these concerns in mind, is it time to flip the portfolio bearish?
For now at least, I don’t think so, as the indexes are less than 5% off their all-time highs and option activity has not swung bearish (mostly mixed). In addition, given the dramatic move in the bond market, a decline of “only” 5% from all-time highs is hardly the end of the world. Throw on top of that the typical early-January volatility, and for now at least, this pullback feels normal.
That being said, should conditions worsen we will continue to unload bullish positions and add bearish trades.
Finally, IF conditions improve, I continue to be impressed by the strength of MRVL, DECK, BIRK and more.
January 6, 2025
Weekly Update
With the calendar flipping to 2025 and the long holiday weeks/weekends behind us, most traders will be back at their desks starting today. Let the fun begin!
Here is where we stand with our open positions …
Robinhood (HOOD) January 15/26 Bull Call Spread – At this point our bull call spread is almost at its full profit and I would expect we will be exiting this position in the coming days to lock in our big gains.
Corning (GLW) May 47 Calls – Much like most of the market, GLW has been mostly chopping around for weeks. And while we would like to see GLW stock higher, it is also acting just fine, and of note, option activity remains strong.
On Holding (ONON) January 42.5 Calls – ONON rallied 1% last week and with two weeks until expiration our calls are now at a potential profit of approximately 100%.
Oracle (ORCL) March 160/240 Bull Call Spread – ORCL has been a sloppy mess since the stock fell on earnings in December. This is not encouraging action, though in reality this isn’t terribly surprising as most of tech has gone nowhere to down for much of December and early January.
Palantir (PLTR) January 26/45 Bull Call Spread – At this point our bull call spread is almost at its full profit and I expect we will be exiting this position in the coming days to lock in our big gains.
Occidental Petroleum (OXY) March 52.5 Calls - Slowly but surely OXY has been on a nice two week run and option activity has remained bullish throughout. Maybe the calendar flip to 2025 is just what OXY and its oil peers needed.
Rocket (RKT) March 20 Calls – Contrary to OXY, RKT still stinks in early 2025 trading action. Just so gross.
Walmart (WMT) January 65/95 Bull Call Spread – Last week we closed our WMT position for a profit of 600%. As I said countless times last year, “Who would have thought WMT would yield such monstruous profits?!!”
Financials ETF (XLF) June 50 Calls – Much like most of the market the XLF has been a choppy mess as of late. That isn’t to say the financials look bad; instead, they have gone virtually nowhere as the Santa Claus rally never took off.
Jets ETF (JETS) January 26 Calls (exp. 2026) – What I wrote about the XLF above mostly applies to the JETS … though I will say the Airlines/JETS do look better than the XLF and option activity has been stronger.
Sofi (SOFI) July 16 Calls – SOFI fell on Thursday when the stock was downgraded (by a firm I’ve never heard of). Then, Friday the stock snapped back nicely. Essentially, this wild stock continues to act volatile day-to-day, which is what we expected when we got involved.
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