To The Moon

This week, the market will focus on the US Federal Reserve's interest rate meeting, and technology giants and heavyweights such as Microsoft, Amazon, Alphabet and Meta will release quarterly earnings.

Last week, gains in blue-chip stocks including Intel, Procter & Gamble, Nike and Chevrolet propelled the Dow to its 10th straight day of gains, the index's longest winning streak in nearly six years and a sign that the rally is spreading beyond a handful of chip makers and technology companies to other parts of the economy such as health care, airlines, energy and banking.

As the rotation has accelerated, the worst-performing sectors in the S&P 500 this year, such as utilities, health care, financials and energy, have led the rally so far this month. Healthcare and financial stocks rose 3.04 per cent and 2.74 per cent, respectively, last week, recovering all their losses since the start of the year. Energy and utilities stocks were nearly flat at the start of the year.

Analysts have also attributed recent tech volatility to an "extraordinary rebalancing" of the index to address the excessive concentration of a few tech heavyweights.

The Fed will deliver its interest rate decision on Thursday, and according to CME Group's FedWatch tool, most traders expect the Fed to raise rates by 25 basis points (bps), which could be the 11th and final rate hike in the current tightening cycle.

Microsoft reports earnings after the closing bell on Tuesday. From the perspective of the trading direction of option clues, it is mainly bullish. The market is more optimistic about Microsoft's results.

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Option buyer open position (Single leg)

Highlight order:

$NFLX 20230804 430.0 CALL$

$AMZN 20230811 130.0 PUT$

$U 20230728 45.5 CALL$

Note: This image data is from Tiger PC. This screening is a significant buy open position for options contracts in the market. The purchase of a call option means that the trader believes that the underlying has upward momentum, and the purchase of a put option means that the trader believes that the underlying has downward momentum. These contract openings typically indicate significant activity in the underlying stock, including whether the trader is willing to accumulate a long or short option position.

Option seller open position (Single leg)

Highlight order:

$UPST 20230915 57.5 PUT$

$BABA 20230811 94.0 CALL$

$GOOGL 20230901 108.0 PUT$

$ORCL 20230915 87.5 PUT$

Note: This image data is from Tiger PC. This screen is a significant sell open position for an option contract in the market. A sell of a call option means that the trader believes that the underlying trend has peaked, and a sell of a put option means that the trader believes that the underlying trend has bottomed. These contract openings typically indicate significant activity in the underlying stock, including whether the trader is willing to accumulate a long or short option position.

Options portfolio open position