In this episode of Next Week on the Trading Floor, Andrew Brill and Justin Nugent of Market Rebellion discuss the recent market trends and opportunities. They cover topics such as the Fed meeting, CPI numbers, and deflation. Justin shares his picks for the week, including NVIDIA and C3AI, and discusses unusual options activity in Netflix. The conversation emphasizes the importance of sticking with what’s working and doing thorough research before making investment decisions.
Andrew Brill 00:05
Welcome back to next week on the trading floor. I’m your host, Ron wealthy. I’m Andrew brill, and we’re here to help you keep and grow your money. Next week on the trading floor was developed to explore current trading ideas, market trends and opportunities to watch it’s real time insight to help you make informed decisions in the ever evolving financial markets and in conjunction with market rebellion will give you pics that will help you in the week ahead. Now I’d like to welcome back Justin Nugent of market rebellion. Justin, nice to have you back with us this week. Thank you so
Justin Nugent 00:42
much, Andrew.
Andrew Brill 00:44
So just a lot going on this week, we had the Fed meeting, we had CPI numbers. The market keeps rolling on.
Justin Nugent 00:52
Yeah, absolutely. And what we’re seeing a lot of, it’s kind of what we thought we were gonna see we’re seeing the formulation, we had the CPI 3.3 versus 3.4. Expected that’s down still increasing, but it’s increasing slower than we thought. And that’s a win. month over month CPI was 0.0 versus 0.1. Expected 0.3 previous that’s a when we saw the F the Fed pause anyway. And you know, we knew that they were going to pause they tried to talk tough, but the market finally said, Hey, we don’t believe you anymore. Fool me once. Shame on me. Fool me twice. We’re still gonna buy once shame on
Andrew Brill 01:38
you. Fool me 100 times shame on me, right? Yeah.
Justin Nugent 01:42
I’m pulling that George Bush from from way back then I fool me. You can’t fool me again. That’s that’s the vibe I’m giving off here. But But regardless, they said we’re buying it. We don’t care. We’re buying it. And the Fed is obviously happy about the information that they continue to get. Because the PPI month over month was minus 0.2 versus an expected gain of 0.1 and a previous of 0.5. That’s a when initial jobless claims. Guess what. Also a deflationary when 242 versus 225. Expected to 29 previous. And today, what did we get the May inventory report that was what was minus point one. And that was better than expectations as well. So really hard for the deflation deniers to to make a case here. I’m sure we’re still gonna see Kashkari come out and say the same stuff he’s been saying and be like, oh, you know, rate hikes. They could still be on the table. We’re not expected but they still could be on the table. But Andrew, I’m looking at the table. And there’s they’re not here. The rate hikes are not coming.
Andrew Brill 02:51
And Chairman Powell said as much he says, I don’t see any any rate hikes in the near future. As a matter of fact, they seem to have penciled in one rate cut towards the end of the year. Some are looking for to summer looking for none. So there’s there’s a little division in the ranks there. When you look at the dot plot. There are some that say, oh, yeah, we should get to some that say yet. Definitely one. And then there’s someone said, We shouldn’t be having any but the economy continues to roll on the markets continue to hit new highs. And another thing that continues they deny is your your pick for last week, which was the s&p 500 ETF, which you said was a longer term bet still went up this week.
Justin Nugent 03:36
Yeah. Oh, man. I just want to thank you, well, Theon and Andrew and market rebellion for allowing me this platform to make a prediction that literally nobody else is, was a fan of here. Now it’s starting to look like we could get even higher than that, right? 600 We’re still keeping it 600 For the SP y s&p 506,000. We’re halfway through the year, we’ve already done what 13 14% And first half isn’t even done. From here, we need another maybe 10.6% I believe from what we’re trading right now. That equates to about 26% gained throughout this year, which if you look at 2023, we gained a little more than 26%. If you look at 2021, we tend to have more than 28% if you look at 2029 or 2019, we gained a little more than 31% All respective to the SP y so for those out there who thought 600 That’s crazy. It’s not actually so crazy after all for a bull market year. Last
Andrew Brill 04:45
week when we spoke it was around 525 we had last check it was right around 542. So it is headed in the direction that you predicted it would head let’s see if it continues to do that. Now in the penalty box last week. We went to Vail Resorts Vail Resorts had fallen off a cliff with their earnings. And it was it was just about even for the week didn’t really go down too much. And it was a little bit of a roller coaster ride but kind of ended where it began last week. Yep.
Justin Nugent 05:15
You know, that’s okay. They went down, they bounced up a little bit. Ended up with a wash on that one totally fine. Yeah,
Andrew Brill 05:24
a wash isn’t so bad, because you’re not losing. You’re not gaining you’d like to gain but we did hit on the s&p 500 ETF. And then the unusual options activity we had to Robin Hood, the trading platform, and you had the calls on that one. Yeah,
Justin Nugent 05:41
there was an opportunity about midweek, where you could have taken profit on some of the bullish positions in Robin Hood. Now it looks like we’re probably pretty close to even there. But for what it’s worth, even though those particular options expire today, I still believe in this breaking through that volume gap and heading up into those 30 threes and 30 fours. It’s obviously not going to happen on Friday or on you know, Monday. But if you were to maybe get those July 19 Strike calls, or expiring calls, rather, I think that you still have a really good shot at seeing Robin Hood continue to move higher. All
Andrew Brill 06:22
right, so those are the recap of last week, let’s head on over to this week’s picks. And you had mentioned to me in video a few weeks ago, and I actually hopped on board this week alone, it’s up 10%. We know that it opened up Monday splitting 10 for one. So if whatever you had you had 10 times as many shares as you did. And this week alone, it’s up 10%.
Justin Nugent 06:45
Yeah, and video is a really cool story. Because in the same way that we do the measured move in the SP y that’s what we use back when in Vidya was trading at 877, I believe. And I still have the screenshot there from April 26. When we were telling rebels, hey, the measured move here is actually 1191. And yeah, they’re probably going to split Yeah, they’re probably going to beat and raised and all that good stuff. And what do you know, not only did they break through that level, they’re way above it now. And still, we’re going to try and learn from the mistakes of analysts past. And we don’t want to maybe call out any by name. But there’s a rather large hedge fund on March 28, that removed invidia from their model portfolio before the earnings and kind of sparked that very large news sell off that ended up occurring there. And then would later come out to buy back in and raise their price target in in video up to 1200. And so we’re going to learn from that mistake and say, hey, just because it’s up, that doesn’t mean it can’t continue to go up more. We actually saw a bunch of unusual options activity. That’s a technical term today in Nvidia 30,000 calls out next week’s 137 Strike and 33,800 out in August. That’s a massive, massive trade to make. And you know, it doesn’t seem to be phasing these smart money buyers that NVIDIA is already up a lot. And so it’s not going to faze us either. So yeah, I think in video could rise this week. And I think this is just a name that you stick right with.
Andrew Brill 08:29
So those 33,800 August calls, or is that also at 137? Or is that higher than that?
Justin Nugent 08:35
That was the 127 strikes. So the way that I phrased it to rebels today is that there’s a bit of a long shot that you could maybe take out next week’s calls at the 137 strike, they’re at about 131 Something at the time of recording. Those are very cheap. And you know if it works, that’s great. But what we usually like to do is use at the money options, which would maybe be more like a 130. And that’ll up your probability potentially lower your potential reward. But if they just go up a bit, you can see those 130s do well and maybe the 130 sevens don’t quite make it there. It’s all on whatever your risk tolerance is and how much you want to consider doing. But the as I said the August ones are in the money, so there’s very little extrinsic value in those options. That means you’re really just more of a stock replacement, gaining leverage for West capital type trade, and I love them both honestly.
Andrew Brill 09:36
So we usually just unusually right here we go with our loser or the stock that we put in the penalty box for the week. But you’re actually you want to double dip into the to the winner of the week and go with another AI stock and it’s EB C three AI, symbols AI and tell us about this stock that you’re looking for a winner on
Justin Nugent 09:59
yeah You know, we follow the smart money at market rebellion. It’s what we do. It’s what we love to do. And I can’t deny a lot of what I saw today was very bullish, and it’s targeted towards the next week. So rather than trying to find a bearish pick, I think it’s good to roll with what the smart money is doing. We saw yet another very, very, very large bullish trade out in C three AI. Now, these are not the open AI chat GPT people, these are an enterprise software company. But hey, they’re ticker symbols AI, so they probably get swept up into some of the some of the AI tailwind regardless. Now, I don’t know what their reason for buying this might have been. But there is the possibility that today’s This is Friday, today’s little sell off, leads us to a level of support around 2850. And we might be able to see a bounce into that swing high from just a couple of days ago at 3311. That’s personally what I would be angling for. And if I were taking this trade, I would keep it very, very light and tight. Which means that if we broke below, say $28, I would cut this because what we really really care about is trading with discipline. And that means if a trade starts going against you, and it breaks through a level or it breaks one of your rules, you get out, you move on to the next one, there’s always another trade out there. But it’s a cheap, cheap option. So I think it’s worth a shot. AI
Andrew Brill 11:34
is trading right around 2892 as we record this. So if you’re looking for that, you know that 2850 support level of it gets down there and a $33 Sell, you’re making, you know, 10 15% right off the bat. And that’s a that’s a pretty good game to get very quickly. Yeah,
Justin Nugent 11:52
and I would add that the options are absurdly cheap, despite the fact that it’s a high beta named the 2950 strikes that they were buying what you’re just a hair out of the money, they got those for just over 30 cents apiece. Now, option math, if we actually do make it up to $33, then you’re looking at options with an intrinsic value of 350. So you know, that’s a little more than a 10x. It’s rare, but it’s not something that we it’s something that we see from time to time in these unusual option activity trades. And it’s something to keep on your radar if you want to use just a little bit less capital to make a trade
Andrew Brill 12:34
like this. So we head on over to our unusual options activity. And this is a name that’s an a stock that kind of goes up and down. It’s all about streaming. And that’s Netflix. And there there’s not a lot of people I know that don’t indulge in Netflix in some some form. Yeah.
Justin Nugent 12:55
And they have some cool tailwinds with, with their NFL streaming stuff and all the potential ad rev that they could get from that. But moreover, the story that I’m more interested in is one of the technicals Surprise, surprise, it’s me. So of course, I’m looking at the chart. And I, if we could pull that up, I’m noticing a consolidating wedge that breaks out into another consolidating wedge that what a surprise breaks out right here again. And so the smart money came in, they’re buying the 700 strike calls in Netflix, they got in for as low as about 85 cents and as high as about 175. And these, what you could theoretically do is bump these down into the at the money strike of about 670 to up your probability here. But because these options are just so cheap, if you want to take a nice, cheap, long shot on these ATMs, you could even go for what’s called a call debit spread, which means that you could look at the seven hundreds buying those and the 710s selling those for what would be about a 4% gain in the stock from here to Friday, which is not incredibly impossible for Netflix, especially as it looks to break out of this wedge here. And as it’s already starting to do, and if that does take place, you would get those debit spreads for about 88 cents. And if we expired next Friday at 710 or higher, you would be looking at what would be an 11x trade, they would be worth $10 from that 88 cent investment and I just love those asymmetric potential rewards. So those are some different things that you could do with Netflix. So
Andrew Brill 14:44
that would be that would be a new high for Netflix. I think their their 52 week high is about 675 If you’re looking at 707 10 That’s a pretty big nice game right there. Yeah,
Justin Nugent 14:55
I think it’s possible and so does the smart money here.
Andrew Brill 14:58
Alright, so let’s recap Nvidia, you think that that’s what your winner for the week and we went with a second winner, which was also AI, which was C three AI, a software company software, artificial intelligence company. And the unusual options activity is Netflix. So those three stocks we think are going to do pretty well over the next week. Yeah,
Justin Nugent 15:20
the theme here is stick with what’s working, look at the data. Look at the chart, stocks are going up what stocks are doing the best, it’s growth, the high beta AI related tech stocks. And it makes perfect sense. It’s, uh, it’s looking a lot more bullish out here than it has throughout the rest of the year. And I’m here for it.
Andrew Brill 15:42
I will tell you that a few weeks ago, when we spoke you did. Pipe in video, I did get in, I’m up about 11%. So far, so and I have 10 times as many shares. So you know, where it’s all working. It’s not the only trade I’ve made some money on. So you need to listen to Justin, you need to listen to market rebellion. And you need to, you know, just do your own research as well. Make sure that you’re comfortable with whatever it is that you’re doing. So I know that there is on Justin, I know that there is on your advice, money to be made here. But obviously, you want people to be comfortable and do their own research,
Justin Nugent 16:22
always, it’s the most important thing. You know, what I always say is that if you’re not familiar, especially with options, open up a paper trading account. It’s the only way that you can actually say, hey, there’s zero risk in what I’m doing. If you’re paper trading, that means that you’re not using your real money, but you’re using the Real Stock figures, you can find those on Thinkorswim or a variety of other platforms. And just try paper trading, see how it goes, see how theta goes. See how the trades go and find out what you’re comfortable with in terms of risk and try and trade like you actually would trade in real life. I think that’s the best way to really learn what you’re comfortable with. And also to see the power of some of these trade ideas.
Andrew Brill 17:06
You can also head on over to market rebellion.com They have a bunch of educational videos that you can watch that if you’re looking to get into options, it’s a great place to start. Absolutely. Thank you for watching next week on the trading floor. We hope you enjoyed the insights and forward looking information from Justin enmarket rebelling if you need help being financial resilient, please head over to wealthy on.com and sign up for a free no obligation portfolio review with one of our registered investment advisors. If you want to find more out more about options trading head on over to market rebellion.com And remember to follow us Justin enmarket Rebellion on social media for the latest news and information to help you invest wisely. And if you’d like and subscribe to the channel, we’d greatly appreciate it. Don’t forget to hit the notification bell so you can find out when we post new videos to the channel. Thanks again for watching. We’ll see you next time on the trading floor.
