June, the roller coaster of a month

Morning Traders! We are Munny Tree. Helping you rake up the leaves falling from this money tree we call the stock market.

Our newsletter this week is a few days delayed because we had some vacation and with markets closed for Juneteenth we pushed things back a few days. But we’re back! Here’s what we have in store:

• Inflation and the Fed

• Nvidia is the biggest company in the world

• Managing positions

• What we are watching in the markets this week

Last Week’s Performance

The last 6 weeks have been consistently down-trending for our portfolio. We are now about flat for the month 😟. This is almost entirely due to health tech falling…and we are heavily invested in health tech right now. But there are ways to manage these positions and add new ones to bring us back for the last 7 trading days of the month.

Lets see if we can end the month on a high note!

Economic News This Week

The big economic news happened last week and we got a little bit of surprise with some of it.

• Lets start with the Fed. Essentially they are same old story. Holding rates steady and waiting for more data to confirm that inflation is continuing to moderate 💤💤

• CPI and Core CPI both came in slightly lower than expectations by 0.1% each on an annual basis. CPI at 3.3% and Core CPI at 3.4%. This is good news for the Fed

• PPI report also came in lower than expectations at 2.2% vs 2.5%. More good news for the Fed.

Overall markets loved this news and we saw S&P rise about 2% in the back half of the week (unfortunately for us, health stocks didn’t follow suit, and actually went down)

Nvidia is King of the Mountain

There’s no stopping Nvidia these days.

Next week we will have a whole writeup about Nvidia and where things might be heading for the short and medium term.

Managing Trades / Positions

We are going to continue to manage our trades with options in order to limit our downside and provide upside opportunities.

Last week we entered into a collar spread on MBLY which turned out to be a great play. Our max loss on the total position (stock + collar spread) is actually a 2.7% gain. When we entered into the trade the stock position was up 7%. Since then the stock has fallen 20%. We should be down 17.4%. But instead we are still up 2.7% because of the protection from the collar spread. We will likely closet he whole position soon since it’s unlikely the stock recoveres 15% in the next 2 days.

Other positions we will likely add an option layer in order to manage losses or protect profits are:

• KYMR: We are down 16% on the position. The past 2 days saw a drop of almost 20%. A collar spread will protect us and still provide room for it to recover. Depending on how the stock moves on Thursday (6/20), look out for an alert that we are adding this to the position for protection

• BEAM: We are down 8.5%. We are expecting a recovery but there may be an option layer opportunity to protect us until the recovery happens

• FLYW: Down over 10% this looks like a prime target for an option layer. We should be able to limit our loss to about where we are now but still provide upside potential. This way we can essentially hold the position with little risk of losing much more than we already have. And then we just wait out the recovery

• LEGN: Another stock down over 10%. A collar option strategy here is looking really attractive. Limit our further downside to about only another 1-2% while providing upside potential.

What we are watching this week

Managing our existing portfolio:

• DUOL: We are up over 10% and the chart is looking really favorable for us. Hoping to get another 10% in the next few days and sell in the 20-25% gain range.

• MLCO: Up about 6%. We are expecting it to climb back up to $8+ and then we can sell for a 10%+ gain

• RIVN: Still up over 5%. We are hoping to get back over 10% before the end of the month to sell

• MBLY: We will close this position before the end of the week; both the stock and the option collar spread we placed on it to protect our gains. This should net us 2.7% overall profit

Here’s what we are watching this week:

Happy trading! Look out for alerts on new buy / sell position during the week.