VIX Traffic Light
The VIX may be down around 5% today, but my VIX light is yellow.
Remember, a yellow VIX light means that volatility is about to make a big move in either direction. We can expect some up-and-down moves in the VIX this week as volatility jumps and tumbles.
Let me be clear – long-term, I expect volatility to trend lower as the market climbs higher. That’s when my light will likely turn red – but I don’t see that happening until mid-summer, closer to July.
For now, we can expect to see some VIX oscillation as the S&P moves a lot… but doesn’t really go anywhere.
Hence, the yellow light.
Mark’s Watchlist: Crypto Corner
Today’s Watchlist has a common theme – and that’s crypto. Over the weekend, the crypto market was in freefall. Yesterday afternoon, Bitcoin was down more than 50% from its April peak.
But Bitcoin’s movement doesn’t only affect the crypto market.
- Riot Blockchain Inc. (Nasdaq:RIOT) $24.03 (+5.2%)
This Bitcoin mining company is a good alternate way to play crypto. You don’t need a special account to buy this Nasdaq-listed name. And because RIOT wasn’t trading over the weekend, it seems to have been spared Bitcoin’s crash today. That said, I don’t like this name as too long-term of a hold. This is a “trade the days” trend. Don’t hold it overnight, because RIOT could still get pummeled despite today’s bullish flow – and the same goes for COIN.
- Coinbase Global Inc. (Nasdaq:COIN) $226.39 (+0.91%)
Similarly to RIOT, COIN is an alternate way to play the crypto market. But this name is relatively new to the scene after its mid-April IPO. While the stock is up today, it’s still more than 32% below its IPO price.
- CME Group Inc. (Nasdaq:CME) $217.95 (+0.08%)
When I’m looking at the benefits of crypto, CME is one of my favorite stocks. And tomorrow, we’ll take a deep dive into this financial derivatives exchange. Keep an eye on your inbox – there’s a new trade rec coming your way…
“To the Moon” – What’s in Store for SPCE
Last week, Virgin Galactic Holdings Inc. (NYSE:SPCE) was on my Watchlist as a bearish candidate.
And this morning, the space flight company opened almost 21% higher.
Well, over the weekend, SPCE successfully sent two pilots into the upper atmosphere – into space. The U.S. recognizes the 50-mile mark as the edge of space, and SPCE’s VSS Unity reached an altitude of 55.45.
According to founder Richard Branson, “everything worked just like a dream.”
It went a bit differently than the last attempt, when the plane’s rocket engine failed and sent SPCE researchers back to the drawing board for six more months, tanking the stock.
SPCE plans to offer space travel to customers within the next year. Wealthy customers, to say the least. But first, the company needs to pass four more tests – and in the meantime, I wouldn’t suggest hopping on this stock.
SPCE shares may look strong today. But when you zoom out, this stock’s story changes:
SPCE six-month chart, courtesy of StockCharts.com
Since its mid-February peak, shares dropped a whopping 74% to a six-month low on May 13.
Even after today’s show of strength, the stock still sits over 55% below its all-time high after major shareholders sold off their positions.
I mean, I’ve got to give it to Cathie Wood on this one – her ETF, Ark Innovation (NYSEARCA:ARKK), sold 293,962 shares of SPCE in mid-May. Her portfolio may be full of stocks I love to short, but she made a good call getting this junk company out.
Yes, you heard me right – I still think SPCE is junk, even after today’s 20% pop.
They may have gotten a rocket off the ground this time, but I’m not going anywhere near this name… unless, of course, I’m going to fade it.
I’d suggest a bearish strategy like puts on SPCE. It’s still losing the space race to Space X, and it’s going to head back down to earth after this short-term “rocket” up.
There is, however, a company – or two – catching my attention on the bullish side today…
Today’s Impact Money Trade
It’s time to spy on some of the biggest trades of the session thus far, to see where that potential “impact money” is flowing.
Telecom concerns Nokia (NYSE:NOK) and Vodafone (NASDAQ:VOD) are attracting bullish attention today. It looks like one trader is expecting a second-half run above $5 for NOK, but is hedging their bets to be safe, opening 5,000 bull call spreads at the January 2023 5- and 10-strike calls.
NOK – courtesy of Trade-Alert
Meanwhile, the VOD trader is going bigger and bolder, simply buying to open more than 8,400 October 19-strike call options, to speculate on a pop above $19 in the next few months. Vodafone stock was last seen trading around $18.64, up 1.4% on the day.
Click To Enlarge
VOD – courtesy of Trade-Alert
Since I’m hunting two-factor authentication — meaning attention at both the institutional and retail levels — I’ll be keeping an eye on these two telecom names.
Remember – tomorrow, you can expect a new, free trade pick to be added to the Profit Takeover portfolio. Keep an eye on your inbox for the instructions…
May 24 2021