6/9/26 Recap
The SPY is going for its 3rd straight close below the 21 ema today and that would not be ideal. Really nasty action breaking below friday’s lows. Of course cpi is tomorrow and can change everything but I think its safe to say most people think the print will be quite hot tomorrow with the move in energy we’ve seen. If we’re being objective, this is a bear flag forming under the 21 ema and we’re near an 8/21 bear cross down. So short of some really good news on inflation cooling tomorrow, it looks like we’re in for a period of weakness in equities. After that 2 month run we had, that shouldn’t shock everyone and it doesn’t mean a catastrophe, it just means weakness below the moving averages. The next big level for us is that 50 day down around 720, we need to see some basing and a move back about the 21 before we can talk about a new uptrend. Energy keeps going down and the vix is still sub 20, so there are positives out there but from a technical perspective, this is not a good look in any way and that’s why the 21 ema is so key in everything. When you break below it, you never know how long you’re going to be weak for, but you know you’re going to be weak until you reclaim it so it gives you a chance to lighten up where you want incase it is a bigger breakdown.
Over the weekend I said the below about us likely to test the 8 week, and that being the spot we need to hold if this is to remain an uptrend.
Right now we are coming right into it as you can see below. We need to see it hold and turn up tomorrow, if we lose that for the first time since the ceasefire, it is worrisome but not catastrophic. The next level would be that 21 week just over 700 but for now I want to see us hold this 8 week we’re pulling into.
Database Updates
We’re now 2 weeks in and I want to go over some confusion I saw in the discord yesterday. So for starters, these aren’t AI generated trades in the sense that claude is generating trades at random. These are all trades based off a deeper set of inputs and rules that I’ve built in. I have rules and the trades generated are based on those rules and beliefs, they are as follow
every stock is a buy somewhere, that somewhere is based on moving averages and option flow.
every trade can be built better meaning at a higher probability lower strike and/or using short calls to turn it into a call spread
every trade can be turned into a credit by selling puts at key levels and/or utilizing unbalanced ratios to make a trade 2x1, 3x1, whatever
So what the AI is doing is taking 150+ names daily and applying my rules to them, note the audit you see below, if it doesn’t pass my rules, it doesn’t get built. Meaning what you’re seeing on every trade is a trade that is generated within 20 seconds of me logging a trade in the database, the options pricing is live, and the database builds you a trade idea that can be implemented for a credit. So take MSFT today, it drew up 3 trade ideas: defined risk reversal, income trade, and a ratio. Those 3 are for 3 different objectives. They are all built around the same parameters and the income trade takes all the data in my database and builds a higher probability put sale. We already know 80%+ of the puts I log expire worthless, so building a better trade at a lower strike increases that probability even more.
The part some of you were confused about was the credit and I want to make sure you understand more clearly what you’re looking at. Take the risk reversal below, the credit is $21 for the following reason. When you sell the August 350/330 put spread for 5.39-2.96 you get 2.43 in credit. Then you turn around and buy the August 450/460 call spread for 13-10.78 which leaves you with 2.22 in debit. Now you subtract the 2.22 debit from the 2.43 in credit you got from the put spread and you end up with .21. Being that options contracts are all 100 shares, that .21 x 100 is where the $21 in profit above stems from. As you will see the max loss is $1979, where does that come from? That comes from a total loss on the put spread meaning the stock closes under $330 so you lose the entire distance of the 350/330 put spread but since you got a $21 credit that is why the loss is $1979 instead of $2000 on 1 lot of each. On the flip side if MSFT goes through 460 by August your max gain is now $1021 because your 1 lot maxes out at $10 per which is $1000 on 100 shares and you got a $21 credit on top.
Does this clear up things? Each trade shows you the max you can gain or lose, now these trades are built within seconds of me logging the trade so yes by the time I send it out, the pricing may be a little different than the people in the live part get but sometimes you get a better entry, sometimes a worse one, there really isn’t much to say but this is one of the best trading tools you will find because it is extrapolating my notions on markets to every name in my database. There’s plenty of simple AI trade generators out there but this is building some really cool trades on a defined set of rules built off of a curated option flow database. Below you will see the put spread sale idea and the 2x1 ratio idea. It also gives you a great thesis on why the trade was built including which of the past trades, fibonacci levels and moving averages all including in the reasoning. So please don’t think this is some random ai trade generator, this is me and my philosophies built out to be applied to any ticker.
My Open Book
