Technical Analysis - Weekly Recap - 2/15/2025

The team discussed various trading strategies, stock performances, and market trends, with a focus on options trading, real estate investment trusts (REITs), and individual stocks. They analyzed the potential risks and opportunities surrounding Super Micro Computer (SMCI) and reviewed investment strategies, including the use of call options and the importance of understanding stock fundamentals.

Summary

Exploring Call and Put Options

The team discussed the fundamentals of options trading, specifically call and put options. Examples were provided using specific stock prices to illustrate key concepts, including premiums, strike prices, and expiration dates. Strategies such as the covered call approach were shared, and it was agreed that options trading education would continue as part of weekly discussions.

Market Performance and Stock Analysis

The weekly market review included discussions on the Dow Jones, Nasdaq, Russell, and S&P 500 indices, with the Dow and Nasdaq showing positive trends. Individual stocks such as Apple, Amazon, Google, Meta, Microsoft, Netflix, Nvidia, Tesla, and Broadcom were analyzed for their recent performance and growth potential. Market conditions were assessed, with considerations of possible reversals. The team committed to continued monitoring and discussion of these stocks.

Trading Strategies and Stock Performance

Various trading strategies were examined, including taking quarter positions in inverse ETFs due to market resistance levels and economic data. Emphasis was placed on scaling into winning stocks and taking profits quickly. Stocks such as AGNC and SOUN were reviewed, highlighting AGNC's strong performance and attractive dividend yield. The potential impact of upcoming economic data and real estate sector trends was also discussed. Other stocks covered included Trade Desk, BlackBerry, and Kava, with reflections on the importance of investor psychology in trading decisions.

AGNC's Residential Focus and Mortgage-Backed Securities Overview

Discussion on AGNC’s focus on residential properties, particularly multi-family dwellings such as condos and townhomes, noted its strategic avoidance of struggling commercial real estate sectors. The challenges faced by REITs with high exposure to commercial properties, such as mall vacancies and refinancing pressures, were highlighted. An overview of mortgage-backed securities (MBS) explained how mortgages are bundled, rated, and sold as bonds to investors. The team's analysis concluded that AGNC's business model allows it to generate stable income in the current economic environment.

High-Dividend Stocks and Market Trends

Several high-dividend stocks, including CHMI, LPG, GSBD, and ORC, were reviewed. A pattern was identified where many of these stocks experienced significant bounces starting January 13, coinciding with a spike in the VIX, suggesting a rotation into safer assets. Additional discussions covered the oil, airline, and biotech sectors. Strong performances from biotech stocks and the ongoing struggles of certain airlines were noted. The session ended with reflections on past investment decisions and strategies.

Trade Desk Call Option Strategy

A strategy using call options for investing in Trade Desk (TDD) was outlined. With a significant recent drop in stock price, the approach involved selling a previous position and placing limit orders for call options expiring in January 2027. The discussion covered analyzing long-term options trades, calculating potential profits, and understanding the impact of volatility, intrinsic value, extrinsic value, and time decay. A specific trade was placed for one call option contract with a $120 strike price and a $12.50 limit order, based on the company's fundamentals and historical support levels.

Super Micro Computer (SMCI) Financial Deadline

Potential risks and opportunities surrounding SMCI were examined as the company approaches the deadline to submit financial documents to avoid Nasdaq delisting. Speculation suggested that the company would report something by May 25 to prevent legal issues. If SMCI does not need to restate previous earnings or revenues, it could be a positive catalyst for the stock. However, the risks involved were acknowledged, with the reminder that this was an opinion-based discussion rather than financial advice.

Stock Trading Strategies and Market Movements

Recent market movements and trading strategies were analyzed, including a review of Crocs stock. The stock was purchased at $93 and sold at $104, $111, and $108, capitalizing on a post-earnings price jump. Another trade, possibly involving Datadog, was reviewed after the stock dropped 32% following a 2% earnings miss. It was suggested that the stock had been priced for perfection with a high P/E ratio and that the drop was an overreaction. While some believed in a recovery based on past trends, a more cautious approach was also recommended, waiting for confirmation before entering a position.

Investment Strategies and Stock Discussion

Investment strategies were discussed with a focus on stocks such as Disney, RxRx, and MSTR. The importance of understanding stock fundamentals before investing was emphasized, using Trade Desk as an example. Bitcoin’s potential for significant price increases was considered, with some predicting it could double or even increase sixfold. The discussion also touched on speculative stocks, with caution advised due to their volatility. Stocks were monitored for potential adjustments in strategy.

Stock Analysis and Trading Strategies

A stock experiencing significant price movement, RXRX, was compared to TIMS, with Nvidia’s involvement noted as a key factor in the price gap-up. While the conviction in RXRX was not strong, a small investment with the possibility of dollar-cost averaging was considered. Other stocks, including LUNR and eBay, were reviewed for price movements and trading volumes. Different perspectives on stock selection were shared, with some preferring established stocks with historical data while others were more open to exploring new opportunities.