Reversion To Mean Is A Thing

Good Morning Bears!

OpenAI news is hitting the AI sector - notably ORCL - as its CFO reported they are not meeting revenue and user goals.

And there is a rumor GOOGL is starting to move away from AVGO.

My reversion to mean call from Monday morning post and live trading room is in play: AMD, ARM, QQQ, SMH, etc.

QQQ has date with 651.85 where it needs to get defended or 642 is next. Mean is 625 at 10W so obviously could be a big reversal EVEN THOUGH market is well supplied into SPX 6950 as I wrote...

Also higher dollar, oil & yields from Iran war escalation & hawkish BOJ.

So my SLV & GLD warning is working for shorts!!!

For long recommendation Monday, check out that DBA breakout :))

And Wheat (sadly) on food inflation woes from fertilizer supply shock and rising diesel prices continues to move higher as expected.

Here’s a quick video snippet from Monday’s post or you can read it in full above.

Just remember, MAG5 reporting and ISM this week.

Looking ahead, we had drama in Tokyo where THREE dissented against a rate hike pause. USDJPY did a quick trip to express this hawkish bent before getting defended, but I call attention to it because it will have follow-through on an actual hike. And a reminder that a sharply rising yen can impact the yen carry trade unwind in NDX. For now, this is more of a Q2-Q3 risk, but it can be market-moving like (read: July 2024 redux) this summer. Hence why June looks particular vulnerable for markets.

Have a great day & see you in the trading room!