Although I think the longer-term direction of the market is still down, I must admit it looks as though there could be an opportunity to play a bounce right now. While nothing is certain about today’s action, of course, what is certain is that you want to be looking at the right kinds of stocks.
That’s what I was trying to get across this morning on Money Morning Live when I flashed this table. I try to show it regularly.
Now the stuff in yellow is the uncertainty. Stocks that option traders haven’t really committed to one way or the other.
Those are the kinds of stocks Kenny Glick is going to be banging away on. They’ll provide the quick intraday moves he likes.
But for me, I’m looking more closely at the red and the green stuff. Have you seen that show on Apple TV about the founding and fall of WeWork (WE)? It’s called “We Crashed.”
What I’m talking about is not fiction, however. The option data suggests that traders think it could be set up for even more downside action. So of course, I’m watching it closely for opportunities that I might consider — like an at-the-money put option with three weeks of time on it for only 75 cents.
But the one stock on this list that I’ve highlighted in green, Planet Labs (PL) has something going on. It’s jumped by 50% in the last two weeks and broke a new high. This might be just a short squeeze that is already played out, but on the other hand, this could be a stock that will ride the bounce higher — if the bounce does come.
No matter which way it goes, you need to have your gameplan setup. You need to have your trades, your entries, your stops, your profit-taking strategies planned out before you get in.
Who’s going to help you get that stuff right? That’s what I’m here for! Join us today to get yourself ready for the long weekend ahead.
Quantitative Specialist, Penny Hawk
May 27 2022