Not My 1st Rodeo
I run a live trading room because it really forces me to pay attention to EVERYTHING macro-to-micro.
It's not for everyone, but I believe there is also something for everyone as I spy tradable themes across Chase, Swing and Trend timeframes.
While I am scanning and synthesizing market movements, to spot changes in the market character to better position clients long and short, I'm also able to see how option market structure intersects with macro, and when sector rotation morphs into repricing of risk through volatility.
I believe my job is to add value by spotting the volatility in advance AND determining the intensity and duration of the move once it triggers.
Trading successfully, is all about accepting, embracing, and managing the ranges of volatility.
Gold Spike Was The Tell
So when I came out Friday and warned that the Gold spike was a warning for Nasdaq to "slow the f*** down", few understood me, but luckily most client's know this is not my first rodeo.
I have a reputation of knowing when volatility will enter, and not because I am a perma-bear.
In fact, I have been VERY bullish since mid-Nov, doubling down mid-Jan, and only twice this year have I warned CLUB/EDGE clients to brace for 'shake-n-bake":
Thursday Feb 8th before VIX moved 40%, and again last Thursday, offering up both times some nice, cheap hedges for those who wanted to stay swing long and/or chase short.
Today in my trading room I specifically gave 15.21 as VIX target (15.69 overshoot) this week, before we can really see if this is MORE than just dealers selling out of their stocks as theta decay of calls kicks in as we approach Powell Wed + Thurs.
In short, I also track how busy net call selling (bearish) compares to call buying (bullish), and it was clear we were due for a rest.
@spotgamma confirmed today:
Call skews are flattening which is a reduction in bullish exuberance.
This morning was a bit rocky start with the tech issues, but I already had a thesis and plan, so all went really well with chases short in QQQ, SPX, TSLA, AAPL, MSTR...
Swing & Trend longs are doing fine - protect aggressively if VIX gets/stays above 16.12 on weekly close; but otherwise, I am not seeing net selling of size or breadth destruction under the surface, yet, to cause me to say "everyone out of the pool".
I do see a bunch of divergences in my intermarket tells, where price has gotten ahead of itself, so this 'digestion' is but a happy dance for patient bulls.
I still see no reason to swing short, yet.
Let's get through Powell Wed/Thurs and Payrolls Friday.
Speaking of NFP Friday, as reminded by @FinFluentialx:
Fed rarely cuts rates when core CPI > unemployment rate
Core CPI (YoY): 3.87%
Unemployment Rate: 3.70%
Also, we have ANF earnings in the morning. Why do I care about a mall retail clothing store? Because it has outperformed both NVDA & BITCOIN since May 2023. And I can't wait for the jokes to write themselves if a reversal times with weakness in NVDA + Bitcoin.
Patience, It's Not 2021 or 2000
Again, Nasdaq 100 is only down 2.9% since my call Friday. It is way too early to call a top.
However, I have been waiting for Tech to roll-over, as I recanted daily given my IWF:IWD growth-to-value ratio analysis.
Datatrek on the internals of today's decline:
Large cap Tech (the XLK ETF) fell 2.5 percent. The sector’s current S&P weighting is 30 percent, so this translates to a 0.75 percentage point decline in the S&P 500. With the index down 1.0 percent, that represents 75 percent of today’s move.
Yes, Powell speaking Wed/Thurs is a risk, but he could also push back on politicians pursuing their rate-cutting agenda; in the same way he could appease them as leverage for his bank capital reserve agenda. I don't know, but I know we need a macro risk to trigger a -2% down day in SPX that sparks forced selling not buying. Until then...
Investors are positioned for more upside, according to GS.
Like 1997 level kinda upside - based on put-call skew.
We haven't even reached 2021 let alone 2000 levels of euphoria.
GS: The 10 largest stocks trade at P/E of 29x vs. 47x at peak of 2000.
Like Bitcoin, lots of stocks have worked their way back up and/or exceeded their 2021 highs.
Like Gold ;-)
The timing of gold prices breaking into blue skies AS term premia on UST rises intonates that Gold, not Bitcoin, is a much better hedge in a "real" interest rate environment.
Plus gold has real value. It's not merely a means of exchange like bitcoin, traded by those in need or those in greed.
Gold is used by central banks extensively in addition to being used in the creation of goods + services.
I wrote about my gold thoughts three days in a row (record) AND posted/will be posting my most important gold charts for clients in my #intermarket-tells channel in slack. Suffice it to say, I’ve got a feeling you will be hearing more from me on this subject.
That's what I do when I'm not running my live trading room: analyzing, reading, engaging, writing, commentating - so I am in sync with the market and can help position clients for the next big thing.
Right now, the big thing is patience.