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Tuesday, May 30, 2023

This Isn't Normal! The So Called AI Gold Rush In Technology Stocks And The Rigged Options Market

To get you caught up to speed on this Technical Tuesday, day after Memorial Day:

 Light volume holiday trading continues, as many traders remain on holiday this week.  

The $SPX managed to close above the 4200 level, for the second week in a row, on Friday, and that round number target was easy to achieve, on light Holiday volume. 

This proves that all the lame stream media's hand wringing over a possible US debt default, was nothing but smoke an mirrors. Another bear trap, designed to keep the retail investor on the sidelines, or worse, short. 

Even Warren Buffett knows a US default isn't possible. See:

 The So Called AI Gold Rush In Technology Stocks, And The Rigged Options Market 

We continue to see bearish capitulation in the tech sector:      

Panic buying in technology stocks continued on Friday, as retail short sellers were squeezed into yet another weekly Options Expiration date. 

This is exactly what you want to see, at a market top; bearish capitulation, but there's something else going on here. 

This isn't normal 

One of the biggest drivers of this rally has been a stock called Monolithic Power Systems, a company I've been following for a long time, and one that was also pumped into the end of 2020.

Unusual option activity... 

Long time followers may recall from my last FXStreet interview - around the time just after the covid crash - where I talked about how the rigged Options Market, and the short sellers of the $VIX., and In that interview I specifically name the Najarian Brothers, and I'm sure you've all seen the commercials... 

As they themselves explain, they're system involves gathering intel from observing the options market and when they see something unusual, they recognize this as big money getting ready to make a move, and they follow the big money, by placing the same bets. Of course if everyone is on the same page, as I'm sure many traders are...  then you have a snowball effect like we've recently seen in the tech sector. 

I believe this explains the explosive moves we're seeing in the tech sector. 

Looking At Monolithic Power Systems's Recent Unusual Options Activity benzinga 

$MPWR - compare the recent action to the options targets in the above article 

And now you know the rest of the story, and this far better explains the action we're seeing.... than when Bloomberg falsely reports that tech stocks are rallying, because there is fear of recession, or when CNBC falsely reports that AI stocks are the next gold rush. 

We haven't seen a rally like this since tech was pumped to new highs in 2020, and this is reminiscent of the boom bust cycles we've seen over the past 20 year, as excess liquidity moves from one sector to the next, in cycles, and I plan to get deeply into this subject in subsequent updates. 

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