Is it All Over? (March 11-March 15)
March 11-March 15, 2024 by Adit Dayal for RIPPYGLOBAL.
Good evening traders and welcome to the Rippy Global weekly outlook. The market finally ended last week on a muted note after what has been an amazing rally.
Let’s take a look at what next week has in store for us!
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First, let’s talk about AI. Nvidia finally had the massive dump bears had been waiting on dropping 70pts in just a few minutes. I think it was mostly options expiration wizardry causing all the volatility (as market makers came to expiry and rehedged their positions it changes how many shares they need to offset these options). I wanted to talk more about regulation in the AI space today which is something I think a lot of traders are overlooking. First, litigation is a huge part of trading stocks and keeping an eye on names like META after reports of a TikTok ban can be interesting plays, but what’s the status on AI? I think this can be a headwind soon and one many traders seem to be forgetting about, but there’s no real progress in congress right now. Another thing I am watching in terms of legislation are weed stocks. One of the big catalysts traders were watching last year was the rescheduling of cannabis to a Schedule III drug vs. the current status as Schedule I (high risk drug). President Biden seems intent on reducing the legal ramifications of MJ use, but the Wall Street Journal is reporting that certain officials inside the DEA have cited issues with this move. There are concerns over how valid the claims of therapeutic benefits are as well as how modern strains are more dangerous than previously studied.
The third most crowded trade apart from long Mag 7 and short China is the long Japan trade, but is the rally overdone? The data is showing that there still may be steam in this rally, and Buffett, who’s been long Japan for so long to no avail could finally be seeing the turnaround he’s been waiting on. There’s three things mainly driving equities according to MarketWatch: the first is a weak yen boosting exports. The second is that buybacks are up 3.1% to over HALF of free cash flow and companies are boosting dividends, the last is that certain savings accounts are now tax free for longer with higher limits. To these three things, I think we should look for more US traded Japanese quintiles and to go long the actual exchanges in Japan itself which could be an interesting play.
Bitcoin has continued to run, tapping a new all time high over $70K and doesn’t show signs of slowing down. As I mentioned last week there are a lot of people waiting for the “Bitcoin halving”. catalyst. As I mentioned last edition, it’s expected to come mid-April, and for a quick recap it’s just when the reward for mining a Bitcoin gets cut in half- thereby reducing the supply and constraining the amount of Bitcoin in the market. For example, the original reward for mining a Bitcoin was 50, and next month that will go to 3.25. The average increase after this event so far has been +67% which would put us in line with the $120K price target set on it by some analysts last week. Personally, this stage of market euphoria is something we’ve seen before and I believe anything over $80K is just a cherry on top of the run we’ve gotten. Most of the catalysts have been priced in (ETF’s, halving, interest rates) and I’m not sure what information the market doesn’t have about the asset to create more opportunities.
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#1) Earnings week isn’t huge this week, but I anticipate some movement in retail stocks with Dick’s reporting. I also think AI media stocks will move on Adobe earnings?
#2) On Monday, betting becomes legal in one more state with North Carolina joining the mix. The NASDAQ will also give us the most up to date short interest numbers,
#3) On Tuesday, $ARM lockup is set to expire (based on info I know about SoftBank they really like to hold the shares and may cause a squeeze with so many people shorting it into the event). The CPI inflation report will also be released.
#4) On Wednesday, the house will vote on the bill that may lead to a TikTok ban.
#5) On Thursday , the PPI report will be released at 8:30 AM.
#6) On Friday, it’s quad-witching day for derivatives expiration and may lead to excess volatility.
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S&P 500
The S&P finally rejected strongly where it needed to right at this trend line and with the weakness we saw in market leaders, I don’t think we’re going into a correction but just a cyclical rotation. For now, we are still in the trend but earnings are a bit overdone and I want to see some movement into commodity and energy names here soon.
My key breaks are $513.62 for bulls and $505.65 for bears.
The best ways to play the S&P 500 are via. SPY/SPX options or SPXL (3X Bull S&P 500 ETF. 
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INDIVIDUAL STOCKS & LEVELS
Let’s recap some of the levels of some popular names:
TSLA
Tesla is still just hanging in by a thread here which makes it hard for me to have confidence in the name, but a great former hedge fund trader I know and respect is starting to add into a position in May call options, so this $172 level may be a spot to start slowly adding long while the EV market is weak. Rivian saw a surprising amount of preorders, so the “EV death” story may be a bit overplayed here in the short run.
AAPL
Apple is still in this bearish pattern although it did show signs of a reversal on Friday while the market was red. Still not a chart I would look to go long, but I appreciate the relative strength from the name. I still think the next catalyst will be the WWDC developers event where we’ll get a better look at AI from the company.
Options Flow
There are a few large orders here on Friday that I’d like to cover, but in line with our Tesla above, we can see some huge orders there. There was also some massive positioning in ARM before the IPO lockup next week which I think can be a great play.
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Insider Activity
Insider buys were great last week producing meaningful moves and I really like IONQ and SPHR for continuation.
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Thanks for reading this weekend’s article, have a great week!
-Adit Dayal (https://twitter.com/tradelikehulk)