6/10/26 Recap
The SPY gapped up and is now doing what we do in a downtrend, selling back to lows. As you can see this is our first open below the 21 ema in a couple months as the last 3 days we closed below it but every candle there opened above it. This is officially a downtrend if you were still on the fence that it wasn’t. The chart can’t get much clearer, you have the 8 ema close to crossing down through the 21 in another 1-2 sessions. Is it SpaceX? Is it Iran? I don’t know, nor do I care, the weakness will persist for now until it doesn’t. That 50 day is creeping up and at 720 now. This chart is exactly why I always mention the 21 and its importance. In the history of markets no sustained weakness occurred above the 21 ema but 100% of prolonged weakness occurred below it. Understanding when to press things and when to step aside are key if you’re going to be trading short term. While the ai trade is our future, we have a major problem right now with this Iran situation and the inflation its causing. If you remember 2022, Amazon is a perfect parallel to what we’re seeing in megacap tech now, it went FCF negative at the same time inflation was ramping and it caused Amazon to fall 50% even though business was going otherwise well. If inflation really creeps in right now just as every hypercaler is going FCF negative, the market will not be happy at all. So you have to be on edge about that because as fun as it is with all these small ai components getting all this new business, almost 40% of the market is the megacaps.
On a brighter note, that MMM trade I highlighted 2 days ago worked beautifully today as the stock nearly hit 162 turning these into $5 from from the 1.47 entry. The point I wanted to make with this one is when I flag something expiring in a couple of days and its this much size, yes $690k expiring in 4 days is significant, you likely want to think of how to trade around that information. What made this one so special was it was a name with no data in my database combined with a large short term call buy. That is a recipe for success in the rare event you see it and this one was proof of the stars aligning even in a weak tape.
Recent Feature
I just crossed my 4th year on substack and I just wanted to say thanks to all of you who make this place what it is. Someone published a piece recently about the top converting substacks here and it was really surprising to me to see myself at the top and how far this place has come in such a short timeframe. To be the 4th ranked finance substack is crazy to me, I’m just a guy with a very small audience sharing musings on the market. The fact so many of you trust me means alot to me. Thank you.
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