Daily Plan 5/23/23
Hey there...
Industries and sectors have distinct patterns of valuations, just like the stocks that comprise those.
For instance, one of my favorite stocks during the stimulus-fueled 2020-2021 frenzy was LoveSac ($LOVE).
At its peak as the price approached 100 dollars, its PE ratio approached almost 100 and its price to sales approached more than 4!
A very very extended ratio for a furniture company! Yes, they sell 4000-5000 dollars couches which you can arrange and rearrange in a million configurations if that’s your thing but come on now! A 3 billion dollar niche sofa maker?
Then the inflation happened and the FED rates went from 0 % to more than 5% in a year.
The bubble in the sofa market popped and the stock dropped like 90%.
This stock is now languishing here near 20 bucks and the only reason it caught my eye was I saw an insane amount of call volume in this beaten-down couch maker for June MOPEX).
These option volumes can mean anything, I do not read much into it, but I did see this stock sell down near a mere 300 million dollar market cap. Now I do not know if it has lower to go or how much longer this remains at these levels, but I do know that the brand LoveSac alone is worth about 250 million if you ask my opinion. I personally think this is quite near a meaningful low (18-20?). I wanted to share this FWIW.
Folks, in my quest to send the newsletter last night, I forgot to send another name that showed up on my watchlist.
PDD at 60 bucks. This stock is up about 4% today and I had a bullish bias going into its earnings with my LIS around 57-58.
Speaking of up, many more names shared by me had a great day today with PFE alone bouncing about 5-6% today. The full list can be seen in my newsletter last night, I will not be repeating that here.
Also, there is still time left to benefit from one of the biggest sales in this newsletter. Click the link below. It does not get better than this!
If you already have it, maybe you can get your friend one who may be headed down the indicator rabbit hole. Save them! That is what great friends are for ;)!
NVDA
Just my 2 cents on NVDA earnings.
Unless you just woke up after a year, you know NVDA stock has almost tripled from its 2022 lows. It is now trading 311.
They report on Wednesday. Generally, I think 320 could be potential resistance and 290 could be supported. Again, this is my thoughts only for the ER nothing else.
IV is a little higher than last month but still nothing compared to last year.
320 calls are trading around $4.5 and 300 puts are closer to $5. I personally think in the case of something like NVDA with respect to where it is right now, a spread may have been a better strategy than outright directional bias, had it not been 10% away from the ATH! I do think the sentiment for NVDA is quite rosy going into the earnings. So I think there will be naturally a lot of calls for this Friday.
For a stock that is in a strong uptrend like NVDA, I like the put spreads. I think many of you know what this is but for those who do it, a put spread in something like this could consist of (if I were to make one) selling a 312/315 put for around 12 bucks credit and buying a 292/295 put for around 3 dollars. In these kinds of spreads, if the stock rockets, the 292 puts will go to 0 and the trader pockets the 312 put credit. The max loss on this is incurred when the stock makes a large move to the downside. Now the problem with this going into this earning on Wednesday is that the stock is already up like 120% on the year! Had it been around 200, this would have made a lot more sense to me. But at 310, with a 17-20 dollar spread, a lot can go wrong! Just sharing this as an educational example of spread and in which scenarios I like them. I will be sharing spreads I like more than this from time to time with subscribers as my personal favorites.
My levels for tomorrow
Not much has changed to my levels from today. The weekly level shared in the post last night was ALMOST the exact low of the session. Yes, we traded a couple of points below it but not much.
On the upside, the upper level capped the day. Very range-bound day, but good two-way zippers on both sides.
My key levels for tomorrow are 4190 and 4230.
Scenario 1: I expect more rangebound action between these with support potential at the lower end and resistance possible at 4230.
Scenario 2: For trend day, I will like to see an intraday close above 4230/below 4190.
We closed the session near 4200. See weekly plan for longer-term levels and bias.
Folks, as some of you, may know that Twitter is not actively promoting Substack now as publishers chase the limited universe of ad dollars. These types of publications are supported when folks like yourself share and promote the content. Remember, this is what keeps this affordable unlike many of those 300-400 dollar-a-month services.
~ Tic
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