Trading Options Around FOMC
Chart updates for tickers RKT, PLTR, RIVN, OXY, and HOOD.
The volatility has been easing just in time for the Fed to start talking about rate decisions again.
Seems like a good time to go through the watchlist and review trade ideas that I have posted over the past month.
Trading has not been easy but there are a few names doing what we expected and a few more setting up nicely.
RKT
The winner over the past month has definitely been RKT. Let’s study the chart a bit.
The candles retested the recent high and pulled back, stopping just above prior resistance near 15.27. Resistance could be flipping to support.
The 5-day simple moving average (SMA) is something I mention often. Simply put, if the candles are closing above the 5-day SMA I like to trade the upside. Otherwise, I am more cautious and take profits much more quickly if I do take a long position.
The note for RKT is it is firmly above the 5-day SMA and has been with the exception of the dip to test anchored volume weighted average price (AVWAP).
The dark yellow line is the AVWAP anchored from the recent low. It has been respected and therefore is worth keeping on the chart.
Last moving average note is the rising 50-day SMA with shares well above. We want to keep seeing that curl upwards towards the candles.
The relative strength index (RSI) is also very positive. Holding above 50 is bullish and doing so consistently throughout the recent rally is also bullish.
The call options are profitable already and we have until June. This retest of 15.27 is giving another chance to get in on this trade or add to your position if you’re already in it like I am!
PLTR and SMCI
Two other names on the trading watchlist that are testing areas of support near AVWAP are PLTR and SMCI.
The first, PLTR, looks to hold a little cleaner above AVWAP as it puts in higher lows but it is just below its 50-day SMA. Getting pinched and about to pick a direction in a big way.
SMCI is not holding AVWAP as cleanly but I like that it is already above its 50-day SMA. Although it ended up sitting right on top of it to close Tuesday.
If this bounces the way we want, resistance at the 200-day SMA could be interesting.
OXY
It is time to start paying attention to the energy sector as oil tries to put in a floor price and some names are responding with positive moves.
The trendline break for OXY got us interested and it looks to continue.
There is a lot of room to run and with other names in the sector like XOM and CVX trying to break out of recent consolidation ranges, I like the potential here.
The candles broke the downtrend and are now taking aim at the 50-day SMA.
RIVN
I posted a short trade idea for RIVN that by all appearances looks about ready to trigger for entry. If you missed it, upgraded subscribers can find the details here: Long OXY and Short RIVN.
The signs all point lower. Here’s what I see.
RSI is still below 50 (bottom of the chart) which shows this ticker is still weak.
The 50-day SMA just crossed below the 200-day SMA, also known as the death cross. This means the short term trend is weakening relative to the longer term trend.
Bearish as bearish gets and then you add in the rejection at the AVWAP with the long upper wick and I really think the selling kicks off.
We have a plan in place if shares dip below 10.66 and if the rate discussion is unfavorable, RIVN could drop and then continue to drop.
HOOD
HOOD gives me reason to stay interested but with a bit of cautious optimism.
RSI is below 50 and shares have sold off hard after making a recent high just above 66, now a penny above 40.
AVWAP from the August 2024 low is proving to be support. The question now is, does it bounce or breakdown from here.
The 200-day SMA is near 31 and could be tested if markets tank. If we get a move higher, the 50-day SMA is a target near 48.
Let me know in the chat (upgraded subscribers) or the comments (anyone) if you have questions about these charts or any others.
It is going to be an interesting day.
-Nate
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