8/5 Recap

Where do we begin. Today was maybe the biggest VIX move we’ve ever seen, I haven’t really looked into the historical but the VIX was +180% at one point. It has now completely deflated and gone from 65.73 to 31. We’ve spent a good bit of the last year with the VIX under 20, we have had no volatility at all and this shock from Japan overnight caught alot of people offguard. Lots of margin calls, lots of forced selling and you get that nasty open that we had. For the most part, things have slowly recovered since.

I posted this video this morning premarket on why I thought today might be a local bottom and we’re bouncing very nicely now up nearly $15 from lows of the day and $8 higher than the 200 ma on the QQQ. So for the moment, this mornings panic looks like it was indeed the bottom. We may test it again, but we did not close below the 200 day, yet.

Overall you want to be selling puts and buying quality names anytime the VIX is over 30, this morning over 65 was one of a handful of times in market history event. The peak of the GFC and Covid crashes were VIX 80 events. We didn’t even once see VIX over 40 during the 2022 market selloff. The VIX was 15 a few days ago, the move this morning was epic to say the least. The QQQ is bouncing where it should today at the 200 day, while it moved up today, I would expect at least a small move back lower just to retest levels first. It is still very very broken but nobody in here should be caught offsides as we’ve discussed the 21 ema break weeks back and the market has just been weak since, the why doesn’t really matter, look at the chart below they’ve been selling big tech in size for 3 weeks now, last night was just the culmination of weeks of selling. It will take a few days, but the 8 ema will flatten out and begin to be reclaimed and we can begin our next uptrend. For now we have a bottom to trade off and you don’t want to be long the QQQ if it breaks today’s lows or closes below the 200 day at 429.90 now. We have major technical damage with megacaps like Microsoft and Amazon below the 200 day now, others aren’t so hot ex Apple and the market cannot fix itself until the leaders are fixed. Would I be concerned? Not really, seems like a move to the 200 day, shaking the tree a little before continuation, we have not touched the 200 day since March 2023, we got close late last October but did not touch it. I’d be concerned if we start closing below the 200 day for an extended period. For now I’m not.

I added some NVDA shares right at the open at 93.xx and I’m going to hold them for a bit, this is our leader all year long and it was straight down nearly 40%, I felt it was very overdone. The option flow was strong today, I’m going to hold this for a few weeks into its earnings and see where it goes before then. I still have my AMZN leaps, again those have nearly 2 years left until June 2026, the recent move down sucks, but I have 2 years left so I’m not really worried about any short term weakness it faces because this is a technical breakdown now. Worst case I adjust later and move my calls to 2027 when they open, but I see zero need for that at this moment, 3 weeks ago we were at highs and price changes everyone’s sentiment. I’m ok seeing what happens over the next 100 weeks or so, it is plenty of time. I expect Amazon to be dead money for probably another quarter or so after this breakdown. This remains a very poorly mismanaged company with a ton of value to be unlocked unfortunately activists can’t do much with a company of this size so they, the management team, have to come to the realization on their own that what they’re doing is just not working after 4 years of no return on improving metrics and changes have to happen within.

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Today’s Unusual Options Activity

Here is today’s link to the database, as always this link will expire at the open tomorrow, the rest of today’s trades will be added by the afternoon.