6/29/25 Mid Year Recap

Before we get into this week’s best idea let’s talk about the market and where we stand. We just had our highest weekly close of all time. This is literally following the exact same pattern as we saw during the last big sell off in late 2023 where you had 1 close below the 100 week and an incredible rally. We’re now at the halfway point of the year and after all this chaos we’re up 5% year to date. All things considered and with how things looked in April, most should be pretty happy. The reality is we always save the market, April was a little frustrating because for a week there Trump pretended like he didn’t care about stocks, he called it Joe Biden’s market, and once it got bad enough he began with a series of pumps which was the Donald Trump we all knew from his first term. Stocks are quite expensive historically here with rates still elevated but none of that matters, the inflow of capital into our markets is clear and we haven’t even really seen a sustained move in most of our megacaps this year. If that comes in the back half of the year, this market can go materially higher, people forget that 7 companies make up 1/3rd of our market by weight and of those 7, only 3, Microsoft,Meta, and Nvidia have had strong first halves. If the second half of the year sees a catchup from Apple,Amazon,Google, and Tesla which have all lagged the market, we can move much higher.

Here is what my first half looked like, I am up 37.6% year to date after emerging from that April hole. The leverage goes both ways and I will explain more below about what this year taught me.

Everyday is a learning experience even for me and what I learned this February-April was had I stuck to my rules, I wouldn’t have gotten hurt. When that 21 ema(light blue line) broke on the SPY in February I should have closed up everything and just waited for it be reclaimed.

I did close up everything at the time if you remember in February and I moved to treasuries for a month or so. That worked out really well, but I had too much optimism for a Trump bounce because under Joe Biden it really felt like every time we broke the 21 outside of the 2022 war, we recovered it within a few sessions. Now Trump was 1 month into his term in February and maybe the biggest stock pumper we’ve ever seen in the Oval Office by mid March it had been 2 months of weakness so I got back in thinking April liberation day would be a nothingburger as usual. If you remember Donald’s first term was highlighted with daily Dow Jones updates even though the Dow isn’t relevant to anyone. So my mistake was thinking under Trump we would had just have a cheerleader there to support the market, for a week there post liberation day, he pretended like he couldn’t care less about stocks and it caught me off guard. Again if you look above once that 21 broke, we never once recovered it until mid April when Trump backed off the majority of his tariff talks and sure enough, since then we have not closed below the 21 ema one time. When I say that moving average is the barometer of the market, this is why. So drill this into your head, when the market or a name you are in breaks the 21 ema, just close it all up, you’re not going to miss much by waiting for that 21 ema to reclaim and then going long again. If it’s a long term holding ignore that. Just remember you can never get caught up in a prolonged move down if you sell on the first close below the 21 ema. So throw out your thesis and just respect price action.

This week’s best idea is a large cap and we’re going to discuss multiple trade ideas from put sales to risk reversals and ratios, but this one has long been a favorite of mine and I have so many ideas to play it now as it looks ready to run.