4/17 Recap

I had time this morning to go back and listen to Powell speaking yesterday and all I could think in my head was “Wow, this guy wants to raise rates”. His rhetoric was that of a defeated man, I think the market is just continuing to reprice every DCF on the notion rates will remain high if not go higher. I don’t think he would do it before the election because of political pressure but I think either way, whether it is Trump or Biden, Powell has to go higher with rates because nothing is working and inflation is a nuisance that isn’t going to be solved with the status quo.

As for the market, another day another decline. This shouldn’t come as a surprise to any of you in here but we continued lower today with the Nasdaq down over 200 more today. Again this is just a pretty routine 5% correction on the SPX, this isn’t that crazy. That 100 day at a little over 490 seems like our destiny at this point. Whatever happens, we aren’t going to go up for a little while, the 8 and the 21 ema keep sloping down and we just keep selling off until those flatten out and are reclaimed. It is a process, it won’t be quick just like that uptrend we just broke was a long process. Hopefully most if not all of you are out of your short term positions and just waiting for this market to find a bottom. The same way it was easy to see where the breakdown was coming from over the weekend, you will easily see the market take back these key moving averages and begin a new uptrend. Overall we’re nearing oversold levels on the SPY with it nearing rsi 30 and that is usually the time to put on longs again.

This is why I was telling you all repeatedly to try to focus on longer term trades recently, when the market does go bidless as gamma flips negative like the last few sessions, short term calls get decimated. The key to surviving long term in the market is understanding these periods come, uptrends break, but preparing yourself and riding the storm out to cause as little damage as possible short term is all you can do short of going to cash. If you sold covered calls you just picked up some money and still hold your longs. If you were levered up the last few sessions you would have been destroyed, that’s why it was so critical to understand the tide was shifting.

Did I take a hit on paper these last few days? Sure I took a big one, you know my positioning on Amazon and it is finally losing its 21 ema today too, but, I estimate it is still probably 90/10 split that by June 2026 the stock is north of 250 and I did great. I get so many questions asking why I didn’t sell if I thought market would be weak. I still think not paying a huge short term tax bill on that big gain and selling the day I noted that bearish engulfing candle was the right move even though I knew this weakness was here. The math on losing that much to taxes just doesn’t make sense when I think it is materially higher in say 12 months and I’d have a long term gain.

Oil also broke down today, longer term this is a small win for inflation if it can carry through, shorter term it takes away one more recent hiding spot where people were sitting in energy names. I still think it may take a little bit as this panic is unfolding but the megacap tech names are the only true hiding spot in the market.

Recent Trades

C is up 2% today in this massacre. In yesterday’s recap I noted it has been the top trend for a while, these things usually play out. The short term weakness in the market is what it is, but C continues seeing bullish action daily and I still maintain it is probably going to be an outperformer here in the short term. It’s rare that a name is the top trending one with that much size and doesn’t see that move up.

Trends

1 Week

2 Week

1 Month

Today’s Unusual Options Activity

Here is today’s link to the database, as always it expires at the open tomorrow and I will have the rest of today’s trades added to the database by tonight