Weekly Raid #31 - The Collapse of China?
Happy Monday Traders
This has all the makings of a very exciting week
Let’s jump in
News of the day
News releases on the day are sparse. We have a few auctions later today for some T-bills and T-notes.
We do have the Dallas Fed Manufacturing index at 10:30 today, but I don’t see that being a particularly eventful release. Really what’s important today is in the Macro Section below.
The word of the day today is China. Evergrande, the second largest property developer, has lost 90% of its value once it resumed trading on the Hong Kong exchange. It is now trading OTC for roughly a penny. This comes on the heels of some pretty significant economic news last week about a weakening Chinese economy. A few sites have called this there “Lehman Moment” referring back to when Lehman brothers went Bankrupt in 2008.
If this is in fact the start of their economic contagion things could get ugly over the next several weeks. Its important to note that this could have a direct impact on the US given how intertwined our economies are. The Chinese own a significant amount of US land, and we are reliant on them for most of our manufacturing despite recent efforts to relocate some factory assets.
IF this spreads across the entire Chinese economic engine, I would watch for some more severe events to happen on our side of the pond. We have a heavy reliance on them, and if stuff starts to go sideways we could see inflation and prices start to spike again.
Moving on to todays watchlist.
First up is KWEB. With all the china news I thinks its definitely worth keeping an eye on. This is the China Internet ETF, but if the Chinese markets start to go soft, I think its a solid sympathy play.
Watching NVDA is still a solid play I think. We are sitting up pretty high and push the top of a volume node. I think this is a solid option for some short spreads. Premiums are often pretty juicy on Mondays as we are looking at a small gap up which means a pretty immediate adjustment in pricing. Keeping an eye for some elevated IV contracts could pay nicely even if price stagnates.
TSLA is last up for the morning. On the heels of some pretty serious put sellers last week, we have rallied to the VAH for the year. I would watch for the buyers to keep up the pressure and for a break of VAH. There would be two potential options for a trade, first would be the break of VAH and the second would be a rip and dip. Have the stock rally though and than fall back under VAH for a run lower target of the POC around 200.
As always trade well and Good Luck