Video summary
The video begins by analyzing a volatile market session where major indices, particularly the Nasdaq-100 (Q's), experienced significant declines led by technology and small-cap stocks. Alongside the stock market downturn, precious metals like silver and gold fell while oil prices rose due to geopolitical uncertainty in the Middle East, causing the VIX volatility index to creep back into the high teens. The speaker notes that bond yields are rising and mentions upcoming US midterm elections on November 4th as potential catalysts for further market turbulence, historically correlating with increased VIX levels before a typical post-election sell-off.
To mitigate these risks, the presenter details a specific hedging strategy implemented on his portfolio, which is heavily weighted toward tech and AI stocks. He executed a put debit spread on the QQQ ETF, buying a $710 strike put and simultaneously selling a $690 strike put with an expiration date after the midterms. This trade acts as an insurance policy, costing approximately $650 per spread but offering downside protection if the market drops below a break-even point of roughly $703. The speaker emphasizes that this is not a bearish bet but rather a capped-risk strategy designed to offset losses in his long-term positions without jeopardizing potential gains if the market continues to rise.
Following the explanation of his hedge, the video shifts focus to five specific stocks the author is watching for potential buying opportunities as the market cools off. First, he discusses Amazon (AMZN), suggesting that after a significant pullback from its recent highs and consolidation near the 180-day moving average, it may be time to scale in again if the price drops further toward $240. Second, Eli Lilly (LLY) is highlighted for breaking out of an ascending triangle pattern and testing key resistance levels around $1,250 following strong earnings reports. Third, Ulta Beauty (ULTA) is noted for recovering from a deep drawdown ahead of its upcoming earnings report in late July, with momentum building as buyers step in near the 180-day moving average.
The final two stocks discussed are CrowdStrike (CRWD) and memory sector leaders like SanDisk and Micron. The speaker expresses a desire to see CrowdStrike decline further toward the $200 range before entering a position, noting its upcoming earnings alongside Nvidia. Similarly, he views the recent pullback in memory stocks as attractive, particularly if SanDisk returns to levels around $145, anticipating a potential breakout back above $2,000 per share. Throughout the analysis, the speaker maintains an optimistic long-term outlook while utilizing his hedging strategy to navigate short-term volatility, encouraging viewers to engage with his community for more detailed portfolio updates and trade ideas.
Read the full video transcript
So stocks weren't so pretty today, guys.
Literally, every index went down with
the Q's leading the losses down almost
2%. We had silver down, gold down as the
VIX went up and oil went up as well. So,
we have to break down where my head's at
the charts. Five stocks I'm watching now
and a hedge that I just put on in the
market. We're going to break down that
trade in this video. So guys, hit the
like button, make sure to subscribe,
join my Patreon if you want to be a part
of my private Discord, see my trade
updates, my portfolio updates, all
that's linked down below in the bio, in
the comments, or go to
stocksurfest.com/patreon.
And now, cheers, guys. Got my good old
energy drink. I appreciate you all for
tuning in as always. And now, let's dive
into it. So, the S&P 500 looking at SPY
went down just about 3/4 of a percent,
just under 3/4 of a percent. As again,
the Q's led the losses today down about
1 and 3/4 of a percent. Now, we're
trading right around the 180 moving
average here on the 4hour time frame as
the Dow went down. Not much. Dow went
down a quarter% and the S&P or which one
am I missing? the uh the Russell went
down 1.3%. So, pretty rough day uh for
tech and the small caps. The S&P not too
bad. Um and the Dow really not bad at
all. Honestly, only a quarter% down as
the VIX, which we were talking about a
couple of days ago. I think the VIX is
going to go up. Oh boy, it's starting to
go up now. We went up over uh over 4%.
Nothing too crazy, but it is starting to
creep up back into the mid high teens as
oil, both Brent and WTI had green days.
Um, WTI went up around 1%. Same with
Brent about actually half a percent. Uh,
but they're creeping up. Brent's now at
91 a barrel. WTI is at uh, you know, 84
85 as things in the Middle East. Who the
heck knows what's going to happen?
Things are stalling. the straight, you
know, who knows what's going to happen
with the straight, when it'll fully open
and who's going to run it. I mean, guys,
nobody knows. There's a lot of
uncertainty, and that's why oil
continues to to trickle up. Not near
where we were a couple months ago,
thankfully. Uh but it is starting to run
off the lows and it kind of looks like
you know and obviously oil doesn't trade
based off technicals fully like other
stocks for example uh but it kind of
looks like we're putting in higher lows
here. We're starting to break out. We
have an inverse head and shoulders. Oil
might be going back to 100 a barrel by
the looks of it and it looks like a lot
of these energy stocks are pricing that
in. you know, we have XLE completely
ripping again. Uh, which is a whole
another topic for a whole another video.
So, rough day for the uh for the market.
Yen carry trades looking a bit shaky.
Bond yields here in the United States
are going up 10-year, 30-year. You know,
there is uncertainty over in Japan,
which is causing fear here in the US
market, which maybe maybe I'll dive
deeper into that in in another video.
And we have the midterms coming up,
guys, on November 4th here in the United
States. And I think there's going to be
volatility. In fact, I talked about in
my previous video, the VIX usually goes
up heading into the midterms, right,
towards 18, 19, 20. And it typically
sells off after the midterms, right,
historically based on my research, guys.
But we are due for some volatility which
doesn't guarantee the market's going to
crash. Uh which I'm not calling for that
quite frankly. But we could get some
sort of pullback. Um I think we will
quite frankly between now and November,
right? And with that being said, I want
to share with you guys a hedge that I
put on. Uh nothing too crazy, right?
It's kind of like an insurance policy
for my portfolio. And listen, when
you're when you're, you know, long a
bunch of stocks, in my case, a lot of
these are um, you know, tech stocks, AI
stocks. I mean, not all of these
companies I own are tech and AI stocks,
but a decent chunk are. You you want to
have some sort of um, hedge in case the
market pulls back, there's volatility,
you know, a lot of your stocks come
down. This way, you can make some money
on the downside. So what did I do you
may ask? Well, let's talk about that
right now. I recently opened a put debit
spread on QQQ as again kind of an
insurance policy,
a hedge on my overall portfolio. And the
trade is pretty simple. You guys see the
cues right here. We're trading at what 7
uh 17 as of this video. Again, we went
down 1 and 3/4 of a percent. And don't
worry guys, we'll talk about the five
stocks after this part of the video. So,
make sure you guys um stick on
throughout. I want to explain my hedge
very quickly. So, what I did again is I
put on I opened a put debit spread and
essentially what I did, it's simple. I
bought the $710 put on the Q's, which
again now we're trading at 717. So, I
bought the 710 triple Q puts um that
expire in November, I believe the
November 20th strike. And at the same
time, I sold the $690 put with the same
expiration date, November 20th, which is
a little bit after um the midterms. And
ideally, I close this trade uh before
that expiration date even rolls around.
But buying the 710 put by buying the 710
put this gives me bearish exposure while
selling the 690 put lowers the cost of
the trade and essentially defines my
maximum profit in the trade. Right? And
the way it works is listen, if the Q
stay above 710 at expiration, both puts
expire worthless and I lose the premium
I paid, which in this case um was about
a debit of $650
uh you know per um you know per put
debit spread, right? So in this case I
lose that completely, right? if um the Q
stay above 710 at expiration um and that
premium is my maximum loss in this
scenario right and it's essentially the
insurance that I'm paying to protect my
portfolio and if the Q's fall below 710
the spread should generally increase in
value at that point my exact break even
price is $710 minus the premium I paid
per share which I think is about $630
to50 in that ballpark. Um, so below that
break even point, which I think is at
roughly 703 for my trade, below that
break even point, that's where the trade
becomes profitable with the max profit
being at 690. The spread reaches its
maximum value if QQQ is at or below 690
at expiration. And since there is a $20
difference between the two strikes, each
spread can be worth a maximum of $2,000.
All right. And if you get more and more
spreads, the more potentially you can
make. And my maximum profit is that
$2,000 per spread here minus the amount
I originally paid for the trade, which
again, remember that was about 650,
$6.50 times 100, 650, right? or 630,
whatever the heck it was. Uh but you
subtract 2,000 or you subtract that from
2,000 and that's the profit, right? Uh
the max profit. And the important thing
to understand is that this is not an
unlimited bearish bet, right? I'm kind
of capped at 690. My downside is capped
at that point. Uh but my upside is also
capped once um the cues reach 690 in
this case. And I'm essentially using um
this trade primarily as a uh portfolio
insurance like I said. Um and if the
market keeps moving higher, my stock
should benefit. And if I essentially um
lose the cost of the hedge, it is what
it is. The the market is going higher.
I'm making money on my stocks. And if
the Q sell off, the spread can gain
value and help offset some of the the
losses in my long-term positions. So
that is what I'm doing right now. Um,
not a crazy amount of money. I'm not
going all in on put spreads right now,
guys, but essentially I want some
downside protection heading into the
election. Um, you know, quite frankly,
for September and October as well, and
that's what I'm doing. And if the Q's
soar to 750, awesome. I'm going to make
so much money on my longs that the the
loss of 650 per uh, you know, spread,
that's not going to matter, right?
because I'm not going all in on this
hedge. That's the point. A hedge is a
small, very small part of your
portfolio. Maybe like 1%,
maybe half a percent, you know, we're
not talking big dollar figures here,
guys, or you know, big percentage value.
I mean, it could be a big dollar figure.
Um, you know, depending on how, you
know, big your portfolio is, but that's
what I'm doing, guys, on the cues to
kind of protect myself on the downside.
And it's way safer than I mean, look,
you're you're messing with options.
There is heightened risk obviously, but
it's safer than straight up buying um
puts, right? You know, it's a bit safer.
And maybe I'll do another video on that
at another time, but I do want to focus
now on these five stocks I'm watching.
We might as well dive into it. By the
way, guys, hit the like button and don't
forget to subscribe. Hit that follow
button if you're watching this video and
you're finding value. I appreciate you
all. So, let's go over number one, which
is Amazon, ticker AMZN. And I know it's
Amazon. We talk about it a lot, but I
think it's finally cooled off enough
post earnings, which, oh, by the way,
earnings were unbelievable. We've cooled
off a good chunk. I remember somebody in
uh my Discord on Patreon was asking me,
"Stos, should I buy Amazon at 270 for a
trade?" I said, "No, hold off. Be
patient." And now we're at 259. Now
might be the time to start scaling in.
And quite frankly, I don't see Amazon
going much under um 240 to 250 at this
point on this pullback. Um you know,
we're right by the 180 moving average as
of this video on the 4hour chart. That's
a good sign. Uh you know, I I think
we've gotten a bit oversold. Not
extremely oversold. We're still up a ton
off the lows. Uh, but we've shaken out
some weak hands. We've seen a good
couple of red days in a row at this
point. I think Amazon um at the very
least could see some consolidation, but
ultimately a pop here in the um in the
in the 250 range. So, I'm excited about
it. Ticker AMZM.
And look, I got a decent amount of my
position called away um especially in my
Patreon portfolio, but I'm still long um
Amazon, right? I did get my shares
assigned on those covered calls um at a
260. Yeah, 260 strike and now funny
enough it's under 260. So if I had a
little further out expiration date, um I
would not have lost those shares. Either
way, um I'm looking to get back in onto
onto Amazon especially especially if it
somehow gets under 240. Um yeah, I'm
going to build out that position again.
So Eli Lily is one that I'm watching as
well. lly. The company just reported
earnings not too long ago. I think it
was in the middle of July or end of
July. Um, no, early August actually.
Man, I I should have had that better.
Uh, let me see here. Um, Eli Liy
reported, let's see if we can find the
numbers quickly. Maybe we can't see them
down here, but I'm pretty sure from what
I remember, they reported pretty decent
numbers. And the stock at this point, it
is starting to break back up. We had a 3
1/2% green day. We're by no means fully
breaking out, but we are testing 1,200
to 1250. That is a big resistance
stemming back from the end of June,
right? And we're making um at this point
higher lows into that resistance. So, I
think Eli Liy could potentially take out
1250. This ascending triangle might play
out based on uh what I'm looking at
here. So, I'm going to set my alert at
1250 on Eli Lily. Mark is at or above
1250. And the next stock here, guys, is
Alta, ticker ULTA, which I like here.
Um, heading into earnings, Alta kind of
got got a bit too oversold in my
opinion. It got very beaten up from
February all the way to, you know, what,
July? We lost about $370 per share. I
mean, this is crazy. Or 270, excuse me.
Either way, 40% and the stock's now been
slowly recovering. You know, it hit 440
a couple weeks ago about a month and a
half ago. Now, we just hit what 560 a
couple days ago. We saw the draw down to
490. Pretty violent pullback. But then
again, it got a bit overbought. Now,
we're seeing what today we had a 5%
green day. Buyers are coming in. We're
getting the pop off this 180 moving
average heading into earnings. And
earnings are on the 27th. So, we have
about a week and a half till earnings.
This might continue uh before earnings,
this momentum. And that's what I'm
watching out for on Alta in the very
short term. And let's see, Crowd Strike
is another one that I'm watching that I
want to come I want to see it come down
a little bit more. A little bit more,
guys. Uh we hit, excuse me, 227
um two days ago, two trading days ago.
Now we're at 212. The stock's down about
7% from highs. That's not enough. I need
to see it come down a little bit more.
We're at 213 right now. If this can come
down to $200 a share, maybe maybe a buck
90. Oh yeah, I think that's going to be
a juicy opportunity on Crowd Strike. And
they have earnings as well. A lot of
these companies have earnings coming up.
Um, their earnings are a week from
tomorrow, same day as Nvidia on
Wednesday, next Wednesday. So, keep your
eyes on CRWD. I want to see it, like I
said, come down a little bit more um
towards about 200, 190 would be ideal.
Then I'm going to start buying uh back
into Crowd Strike. And the memory
stocks, we'll wrap it up here, guys. I
think the memory stocks, quite frankly,
um are going to have more juice left.
This little pullback on SanDisk looks
attractive, especially if it comes down
to 14,500 again. I might have to pick up
some shares. I could easily see SanDisk
back over 2,000 a share. And you're
probably like stocks, wait, didn't you
buy um puts, you know, put debit
spreads? Aren't you bearish now? No,
that is a hedge, guys. I still think the
market could go up in the short term,
right? a lot of these stocks in the
short term, but just in case we dump
aggressively next month, the month after
that, those put debit spreads are going
to help me, right? They're going to save
me a little bit. They're not going to
completely, you know, um recover my uh
losses, but they're going to they're
going to be I'll thank myself. Let's
just say that. And if I add more
spreads, I'll thank myself more if the
market sells off. But I still think in
the short term, SanDisk, Micron, these
stocks potentially could see more
upside. And uh we're still breaking out
of these moving averages. Momentum is
still shifting. We just pulled back. You
know, we had a little pullback day,
which is healthy. Micron, same thing. Uh
the stock closed at about 940, 7% red
day, but we're still holding the moving
averages. We're still above the uh you
know, this this trend here, which I like
to see. So, what do you guys think? Let
me know in the comments. Hit the like
button. Let me know uh what you guys are
trading, where you're at, you know, in
your journey here in the market. And
make sure to check out my Patreon if you
want to keep up with the community in
Discord on Patreon. And if you want to
see my portfolio updates and all my
trades, how I trade options, stocks,
investments, all that stuff is on
Patreon. link down below, pinned in the
comments, in the bio, or go to
stocksurfest.com/patreon.
And with that being said, I'll see you
guys in there. And shout out to all the
members that have joined. Have a great
rest of your