Editor’s Note: At 12:30 PM ET, I’m breaking down today’s volatility reading, a massive social media trade, and the top three stocks on my Watchlist. Tune into today’s live Profit Takeover show right here.
Massive Sector Rotation Is Keeping Volatility Underwater
Money isn’t leaving – that’s something that would turn my VIX light yellow or green.
Instead, money is moving out of the mega-caps in the Nasdaq and into small-cap banks, oil stocks, and industrials.
That’s why the Nasdaq and the S&P (where the Nasdaq has a lot of overlap) are down, while the Dow Jones is moving up.
In a market where the Nasdaq is down and the Dow is up, we could see a lot of sectors moving around. But the broader market will stay pretty flat…
Which is bearish for volatility, keeping my VIX light red today. For more on my volatility analysis, be sure to tune into today’s Profit Takeover show at 12:30 PM ET.
There is one group, however, where the money is leaving – just up and running out of there.
One area of speculative money that is leaving is in large-cap, low-profit names.
I’m talking about companies with big valuations that don’t make money – names like Zoom Video Communications Inc. (Nasdaq:ZM).
That’s bad for an ETF like ARK Innovation (NYSEARCA:ARKK), which is unsurprisingly down 2.3% in the past five days.
The Biggest Winner in the Financials
Did you know that Berkshire Hathaway Inc. Class B (NYSE:BRK.B) is the biggest component of the Financial Select Sector SPDR Fund (NYSE:ARCA)?
That’s right – and the financials have had a good week, up 2.6% since the start of the year:
That means BRK.B, its biggest component, is feeling pretty good too – gaining 2.5% over the course of the day yesterday.
But you know who’s feeling even better than BRK.B? The people who had the opportunity to trade that bump – like my Profit Revolution lifetime members.
I recommended a BRK.B butterfly to my lifetime rebels on October 8 for $1. And this week, they had the chance to exit that butterfly for $3… or more:
And make money they did!
If you want the chance to bank 200% winners like this BRK.B butterfly, then you’ve got to join our lifetime Profit Revolution sessions. My lifetime members get an exclusive bonus session every week…
And that’s when I recommend these multi-leg winners.
How to Piggyback This Social Media Ratio Spread
You’re looking at a trade called a ratio spread, which involves buying and selling options with different strike prices but the same expiration date, like this customer did here.
A trader bought 18,000 of the February 18, 2022 $45 calls for $3.25 and sold 23,000 of the February 18, 2022 $50 calls against it.
This is a pretty bullish trade looking for a move back to $50 a share in SNAP – and if you look at SNAP’s pattern, I think that’s likely:
This stock seems to take a dip, run at $50, and dip right back again. And I think another move to $50 is in the cards.
Now, SNAP is currently in a downtrend, as you can see in the chart above. I’d like to wait for shares to turn and catch a bid for more than a day before I go long here.
Are Old-School Auto Companies Still on Top?
- Ford Motor Co. (NYSE:F)
F is becoming somewhat of a mainstay on my Watchlist. After watching F completely blow its top yesterday, I’m wondering…
Can the momentum continue in this old-school auto company?
I’d look for any selling today as a chance to jump in long closer to the end of the day on F.
- Intel Corp. (Nasdaq:INTC)
INTC is breaking out today.
As this stock heads into earnings, it appears ready to make a run back over $55. And to see how I’ve switched my take on INTC, make sure you tune into today’s show at 12:30 PM ET right here!
- Financial Select Sector SPDR Fund (NYSEARCA:XLF)
I talked about XLF’s bullishness earlier, but the massive paper flow we saw yesterday shows that the ETF and its components could be in the middle of a huge break-out higher. I’d consider going long the February $42 calls here… but if you want more details, then check out my show at 12:30 PM ET!
Remember – I’m going live at 12:30 PM ET today to break down EVERYTHING I just told you.
Tune in right here, and I’ll see you there…
Founder, Profit Takeover
January 05 2022