March 12, 2025
Stock on Watch – Palantir (PLTR)
The Nasdaq is finally having a decent day as the index is trading higher by 1.5% (for now!). And with this bounce in the Nasdaq, many of the leading growth stocks are rebounding off their recent lows. For example …
Palantir (PLTR) is the poster child for the AI/Growth run of 2024 and the subsequent pullback in the last three weeks. And while the stock has been battered, as I wrote on Monday, the 80 level in PLTR continues to be a somewhat critical level as the stock has broken below 80 a few times (including yesterday when the stock traded as low as 75), but big picture, the stock has bounced above and below 80 for the past two weeks even as the indexes have continued to break down.
Regardless of the day-to-day volatility, 80 seems to be the level at which the PLTR bulls have stepped up, and today the stock is trading at 84 as the Nasdaq has somewhat gotten off its knees. And as the stock has bounced, call buyers have stepped up and added bullish positions today, including:
Buyer of 2,000 Palantir (PLTR) November 125 Calls for $8.40 – Stock at 81
Buyer of 5,000 Palantir (PLTR) January 100 Calls for $17 – Stock at 84
A buy of PLTR is super risky as a tariff headline, or another selling wave, could knock the stock back below 80, or even more meaningfully lower.
Regardless, I am closely watching PLTR and other growth stocks that may have seen the worst of their selling for a rebound play if the indexes truly get back in gear.
March 10, 2025
Weekly Update
The selling pressures of the past two weeks continued last week as traders grappled with tariff concerns, a possibly slowing economy, and growth stocks again falling dramatically. By week’s end the S&P 500 had lost 3.1%, the Dow had fallen 2.4%, and the Nasdaq had dropped another 3.5%.
Stocks on Watch and What Traders are Saying
As the market continues to break down, the list of stocks holding up best (though still giving up some ground) is becoming fairly easy to find amidst the meltdown. For example …
IBM traded as high as 265 in the last month, and despite the selling pressures on the market the stock closed Friday at 261. Very impressive.
CSCO traded as high as 66.50 on earnings three weeks ago and closed Friday at 64, and really has been holding its ground no matter how bad the market has been hit day-to-day.
UBER’s high was 82 three weeks ago, and despite the growth stock sell-off closed Friday at 76.
PLTR got hit hard three weeks ago falling from a high of 125 to a low of 80. However, in the last week despite the Nasdaq losing 3.5%, PLTR held the 80/82 level several times and closed the week at 85, which was marginally lower on the week.
And while those tech-related plays have held up well amid the selloff, there have been other stocks and sectors that have surged higher, led by med-tech and pharma. For example:
ABBV broke out to a new high last week and is up 20% year-to-date.
ABT is also higher by 20% year-to-date.
Stepping back to the current market conditions, this has been just about the worst environment you can imagine for call buyers. This is what I mean …
January and the first two-thirds of February the market went nowhere. There were some ups and some downs, but stepping back, very few stocks were moving meaningfully higher. This is a bad scenario for call buyers as those options decay away as time passes.
Then, as we now know, the market completely broke down, which is even worse for call buyers as the calls which had already decayed a bit now completely fell apart along with their stocks.
Hopefully the last couple weeks were a reset and stocks are on the precipice of moving higher. However, if that’s not the case, and we are entering a bear phase, we will ramp up put buying in order to profit to the downside.
Volatility
The Chicago Board of Options Exchange Volatility Index (VIX) closed the week at 23, having briefly traded as high as 26.5 on Friday when the market was at the lows of the week. Of note, with the VIX at 23, this is now pricing in an approximate move of 1.6% per day in the S&P 500.
Option Order Flow was fairly mixed this past week as my Options Barometer came in at:
Monday – 5
Tuesday – 6
Wednesday – 7
Thursday - 6
Friday – 5
Events for the Week to Come
Two inflation reports (CPI on Wednesday and PPI on Thursday) along with the potential Government Shutdown on Friday are the three major macro events this week. Though in reality the market meltdown, and looking for signs of a bounce, will be the focus of traders’ attention this week.
On the earnings front, things are slowing down a bit, though we will get reports this week from leaders such as Oracle (ORCL) on Monday, ADBE (ADBE) on Wednesday and Ulta (ULTA) on Thursday.
Open Positions
Corning (GLW) May 47 Calls – GLW has given up ground for sure, though it does look better than most stocks with AI exposure. For now, and I mean today, I am going to continue to hold the last piece of our trade.
Grab Holdings (GRAB) January 5 Calls – GRAB has definitely pulled back but is hardly a disaster compared to its growth peers. Because we have so much time I am going to continue to hold our calls.
Marvell (MRVL) June 115 Calls – Ugh, MRVL got absolutely smoked on earnings late last week which destroyed our calls. Not great and I will likely be looking to exit this trade on any stock bounce … though of note, I’m also not going to force a sale as there is so little downside left in holding our calls.
Occidental Petroleum (OXY) March 52.5 Calls – OXY gave up a ton of ground last week along with its peers as traders started pricing in an economic slowdown. We need OXY moving higher VERY soon for our calls to regain some premium.
Financials ETF (XLF) June 50 Calls – The XLF, which had looked great, finally came under pressure last week. That being said, the group still looks mostly good, and I am going to give this trade more time.
Jets ETF (JETS) January 26 Calls (exp. 2026) – Last week we took a loss on a piece of our JETS calls as the group has been under a ton of pressure. I will continue to hold the balance as our calls don’t expire until January.
Sofi (SOFI) July 16 Calls – SOFI broke down last week and because of that we took a loss on a piece of our trade. While July expiration seems like it’s far away, if SOFI and growth stocks can’t find some footing, I will bail on the last piece of this trade.
Starbucks (SBUX) January 110 Calls – SBUX finally got caught up in the market meltdown last week. And while that was frustrating, the stock still looks solid compared to 99% of the market.
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