12/14 Recap

Today felt like a blowoff top heading into the last OPEX of the year tomorrow. We saw extreme TICK early in the session, every junk company rallied again and we continue to see that same rotation we’ve been seeing for weeks where money is flowing out of mega caps and into small caps. The IWM, below, has seen a ridiculous 25% move in 45 days or so. It is extremely overbought but these are the interest rate sensitive names and they’re now rallying on the premise we will see multiple cuts next year. The same way mega caps were the trade if rates were going to remain high, now with the notion rates won’t stay high, those aren’t the trade and small caps are.

The SPY is now trading at an RSI of 80. There were just so many people caught offsides all year, this is what we call panic buying the same way people panic sell on the crazy moves down. This is a very scary spot to add new longs with the SPY up 15% since the start of November. I cannot think of one time in history where buying with the RSI this elevated has worked in the short term.

The TNX finally broke below the 200 day, yields are crushed, we’re below 39 now and the higher for longer narrative is officially dead.

Recent Trades

CZR was quite the trade, I noted those 10,000 weeklies below on Monday

and it was looking bleak for a while as CZR was below $43 at one point before the fed speech yesterday and these calls were below .10 at one point yesterday, the equity had an unbelievable 20% turnaround in 24 hours and those calls hit at high as $4 almost today. If you caught this trade congrats, unbelievable.

Another recent winner was ADBE, I highlighted all the puts bought on Friday, I thought it had reported yesterday when I mentioned it in the recap being down 2.3%, that was apparently before earnings because it went as low as 578.xx today down from 633 earlier this week. These put buyers were on point with the direction being lower even in the midst of this nonstop buying of everything.

Trends

1 Week

2 Week