2/21/25 Live Trading Room Market Recap & Trades
With focus on: Trade Review for the Week
Risk Happens Fast.
That’s why I highlighted the troubling divergences I was spying Tuesday after the long weekend.
Same day I offered up some hedges for the upcoming weekend risk:
HEDGES:
VIX - Massive March $23 & $24C rolled in past few days of very large size - 100K+ contracts. Also like the APR financed call spread idea presented last week: 15P sold against 20x25CS for a dime.
EWG - Germany elections this weekend and EWG is pushing 37 when its 10W is 34.50. I like March $35P for $.30.
BEFORE Thursday morning when I warned of the “potential for FX volatility to not only trigger equity volatility, but for sovereign bond duration shock to trigger equity volatility.”
Ironically that same Thursday morning I couldn’t stop the feeling - and repeating as such - that we were about to have oil & yields dump, yen & bonds spike, pushing equities lower & triggering (perhaps outsized) volatility.
One key for me was my trusty US-JP rate spread differential. It just ‘had a look’:
And then to see USDJPY higher pre-market Friday because BOJ Governor Ueda warned they would purchase bonds “quickly” if bond yields rise sharply.
That’s when I knew they were scared - so soon after the news of the bank run: “Norinchukin CEO Plans to Resign After Massive Bond Losses
As soon as USDJPY broke lower after the market opened, so too did my US-JP differential. That was a big reason I could boldly tell clients we were about to have a ‘TRENDING DOWN DAY’ and it was safe to press short.
I had already warned Thursday:
🌟$DIA would lead to the downside into 433 ✅
🌟$QQQ short < 539 into 529 ✅
🌟$SPY short < 607.50 to 600✅
Another tell I had was my annotated VVIX chart. Here was Thursday (before):
And Friday (after) - when I posted to an EDGE client I expected VVIX to end at 108 for the day, form a bullish engulfing weekly candle which would give it high probability to continue in the next few weeks. VVIX hit 107.66 before closing at my hrly PT of 106.52.
REVIEW OF TRADES REC’D SHORT - (besides the above DIA, SPY/SPX, QQQ, WTIC & 10Y) - as discussed live & posted:
AMZN: $234 to 216 PT as posted since earnings 2/7.
META: $725 to 682.58 PT with reversion to mean still in view to 660.
PLTR: $125 to 100 PT as posted just this week with 84.80 still in view.
IONQ: $36 still on way to 30.20
NVDA: $142 to 134 PT as posted just this week AFTER playing it long Feb 6 - 18th for 1800% return on the stated financed call spread for April!
WMT: $104 to 95 PT as posted as bearish earnings bet, with 93.58 overshoot, as posted & still not hit.
CVNA: 286 to 240 to 223 at 100D is -20% crash in 2 days.
DAL: $65 to 60 in 2 days (after cruise-line sell-off was the tell) with MAR 57.50P still PT before assessing if bounce or trounce.
APP: $520 to 417.64 PT after highlighting the large March 7 $520C selling last week which resulted in earnings gap up reversal.
XHB: $106 to 100 is a good start on this trend reversal short theme.
ANF, IRM, INTU: already in play as trend reversal shorts just continued lower!
UNH: was all Alexander’s as posted under #Kentons-corner-of-biopharma slack channel, as he was short before news today of DOJ investigation into their Medicare billing practices dumped the stock another -10%.
By the end of day, much damage had been done despite VIX only spiking +16% pushing it into 18 handle. Still relatively low. But give it a few days - 3 wks.
Market closed Friday mostly red:
UPDATE/NEW TRADES I LIKE: