Ah mid-March. College basketball conference tournaments, and NCAA tourney dreams. (Note from Tim: I guess I didn’t really have to identify the author as someone besides myself. Anyway.)
And of course some high probability seasonality trade opportunities, both bearish and bullish as March monthly options expiration comes to an end.
One year ago, Slope nailed the Facebook and Google plunges before they happened (And boy did that FB plunge happen!).
And based on Thursday’s price action, the bears appear to be warming up the bandwagon once again.
A reminder about the March-to-April options expiration seasonality odds based on prior trading history:
- GOOGL – Going into 2018 it was 7 out of the past 10 bearish April OpEx periods for the almighty Alphabet.
Now it’s 8 out of the past 10 years and 4 of the past 5 to Da Bears.
- FB – Last year it was the analytics scandal, now its a nearly 24-hour outage that freaked out addicts of the social media juggernaut on Wednesday. Just another excuse ahead of the seasonal downswing tendency Zuck’s public stock developed in its short-lifespan.
But Money, you exclaim, Facebook is up nearly 40% so far this year! It’s SUPER BULLISH!
Yes it is. But did you buy it down in the doldrums of December like myself and others suggested for a longer term trade? It has retraced 50% of that drop already.
Also, after suffering two massive market plunges just last year… do you think there might be some back slapping and caution profit taking sellers ahead of 1st quarter rebalancing with a gain that most firms would kill for in an entire YEAR???
Yeah, but here are the numbers: 6 March OpEx periods as a public stock, 5 of 6 to the bears.
Full caution about limited data of course.
Now to the bullish ideas, one will surprise you.
- XLE – My wheelhouse, my soapbox for the start of the year has been in energy. LOOK AT OIL’S YTD CHART! LOOK AT GASOLINE! $HES, $VLO, $MRO anyone? Heck, even the big dogs $XOM and $CVX been rocking 2019 to the upside.
And their associated ETF has seen bullish April OpEx monthly closes in seven of the past ten years, and eleven of the past 15 years.
- NFLX – Yes it’s odd that when the temperatures are warming up outside in the northern hemisphere, that a video streaming company (an inside activity for the most part) does well at the start of Spring. But the charts don’t lie.
Since Netflix crossed above its IPO high in 2004, it has closed the April OpEx period bullish in 11 out of the past 15 years.
Now a note about the Nasdaq 100 and AAPL.
Using the NDX (cash index), the past ten years April OpEx periods have been a coin flip with a slight edge (6-to-4) to the bulls on a closing basis.
Apple however is the inverse (4-to-6 bears’ advantage).
Simple way is to stay away from an index play, and wait for a higher probability time frame to trade both (like after April OpEx…)