Taking Wall Street’s Temp as Stocks Hit Record Highs

Happy Friday, Power Profit Traders!

I hope you had a wonderful and profitable week thus far.

I also hope you’re going into the weekend a smarter and better trader from all the LIVE sessions of late (including today’s early sesh with Team Tom at 12:30 p.m. ET right here!), and perhaps warming up to the thought of finally trying your hand in the crypto world.

I know, I know, I’ve been on a tear about alternative investments recently, but that’s just because I’m so excited about the boom we’re about to witness, and I want you along for the ride.

So if you’ve been on the fence about finally seeing what all the crypto/coin hubbub is about, now is the time to take the leap.

Not only because what’s happening around crypto is an amazing opportunity, but because it’s not a bad thing to diversify your investments.

Going all in on anything can be dangerous — whether that’s putting all your trading capital in a single stock, limiting yourself in your options strategies, or simply going too heavy on a particular sector.

In fact, if today’s Power Profit Trades Watchlist was an actual portfolio, that trader’s positions — albeit bullish only — would be healthily spread across a variety of industries.

This Watchlist also gives me clues to Wall Street’s general temperature, and I’ll tell you what it’s saying right now…

Wall Street Has Rose-Colored Glasses

Today’s Watchlist is based on the Morning Report’s Unusually High Call Options Volume tool — accessible to you for free by following these steps to download and use the TG Suite app.

This data is updated after the closing bell each session, pulling specific stock options that generated – you guessed it! – bigger-than-usual call volume that day.

The Option column tells you which specific contract generated notable attention. One can interpret the code in that column as: Expiration Date (YYMMDD) – Type of Option (“P” for put/”C” for call) – Strike Price.

Therefore, a code that reads 211217C46 would tell you the most popular contract that day was the $46-strike call option expiring Dec. 17, 2021.

What today’s Watchlist tells me is — there’s not just one or two sectors driving the major market indices to new heights…

I mean, the S&P 500 Index (SPX) just closed at a record high on a sixth straight win, and the Nasdaq Composite (IXIC) did the same, extending its own winning streak to nine straight.

Now, we’ve seen previous rallies fueled by strength in particular sectors, like tech, pharmaceuticals, banks…

And during those stretches, it wouldn’t be uncommon to find the Unusually High Call Volume list — which is basically a list of bullish bets — populated by stocks in the sector driving the broad-market gains.

Today’s list, though, is as diverse as it gets, featuring action in:

Energy stocks — Nuclear energy concern Cameco (CCJ) led the pack, while more traditional energy issues Enbridge (ENB) and Marathon Petroleum (MPC) also made the list.

Tech stocks — Near-term call traders flocked to Nvidia (NVDA) and Apple (AAPL), while Jumia Technologies (JMIA) saw action on its LEAPS.

Retail stocks — TJ Maxx parent TJX Inc (TJX) and electronics retailer Best Buy (BBY) were popular ahead of the holiday shopping season.

Auto stocks — General Motors’ (GM) $70-strike call expiring Jan. 21 was active, while electric vehicle (EV) issue ChargePoint Holdings (CHPT) grabbed some short-term traders’ attention.

So there you have it, folks. We aren’t seeing optimism about just the small-caps or just the chip stocks… it’s widespread across the board.

If you’re thinking the markets are overbought, you won’t find me denying it.

But remember this, if nothing else: Markets can be overbought… and stay overbought longer than you may think possible.

Have a great weekend, and don’t forget to hop in the room at 12:30 p.m. ET for another LIVE lesson from Tom’s Trading Team!


Tom Gentile
America’s #1 Pattern Trader

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