Page 2 of 2

VIX 25 + Divergence Signals Short Term Reversal

download (2)Sold $BOOT  +7%
12.18.VIX-25

Got a buy signal (or cover signal) on the VIX today around 25.  A rare occasion where the market went up a lot, then the VIX also went up showing a ton of hesitation buy traders.  This is coming ahead important Fed news, which produced a ton of selling in the afternoon to wipe out most gains.  Tape is very much dominated by day-traders and algos.  Until volume picks back up, we’ll continue to get wide spreads and inefficient bid/ask pricing.  Use limits, otherwise slippage will own you.

The strategy would be to buy up some beaten up stocks, and continue to buy them as the VIX tightens its channel and retraces back to 22 level where we will be shorting heavy.

LONG:  CLDR, SPOT, GRUB, SHOP, TWLO

SHORT:  FEYE, EA, EB, FATE, WWE

Long Cloudera [CLDR] – “Cloud Dare Yah”

Machine learning for the cloud.  This company is all about tomorrow, or maybe the day after tomorrow since its product solutions is exactly what will be in demand once our working economy shifts from dumb labor to routine robotics.  When will that be?  Maybe a few years down the line, but by then Cloudera will have positioned itself to have its 10,000 hours in and their software will be heavily sought after.  Data and what you do with that data is the life blood of machine hardware application.

For now, the stock hasn’t been treated nicely.  Even after beating on earnings, the stock still sells off.  It has nearly been sliced in half since in Q1 earnings report where it traded north of $20.   It’s still a baby stock, with its IPO priced last year at $15, and its marketcap right around 2 billion.  I expect EPS to go positive in 2019.

Tomorrow is earnings, and will traders finally buy into the cloud vision?  Let’s see.

I’m long CLDR through 2020 $15 calls.  The breakeven price would mean CLDR would need to get back to 18 in a few months.  It’s interesting that not even a month ago it looked like CLDR would hit 15.

 

cldr.bet