Continuing with the same topic we've been covering over the past few days: the so called AI/tech/chip boom; which has really been the only exciting thing driving animal spirits over the past several months, although it's also beginning to look a lot like the annual "dash for trash" - in heavily shorted names.
I can prove that all day long:
How about shake shack; is that an AI stock? 🤣 $SHAK pic.twitter.com/xhdWPDugrQ
— Veteran Market Timer (@3Xtraders) May 31, 2023
Getting back to something I mentioned in the first update in this series: The options market.
I like to think of the Options market as an underlying sub-market that more and more explains the real time market action we see every day. This market is where the hidden hand operates. This is where the big fish are lurking, and once you understand that, then you'll have an easier time understanding why the market moves according to certain timelines.
Think back to the market action of the past several months. Pretty dull right? Basically trading in a sideways range, and shaking out the weak hands on both sides of the trade.
Well, while most traders have been waiting for the broader market to resolve itself, the smart money has been driving a sub market, and this time it was the tech sector.
Before the tech sector; it was the casinos,the home builders, and even Silver... and why is that? It's because these are thinly traded markets, and thinly traded markets are easily manipulated.
Notice how you no longer hear about the home builders? There's a reason for that, and it's called, "sector rotation", and what I often refer to as, "whack-a-mole markets".
When Jim Cramer says, "there's always a bull market somewhere", he isn't necessarily referring to the options market, but he recognizes that there are engineered stealth market rallies within the broader market, if you only know where to look, or personally know who is engineering it.
Inverse Cramer
I'm sure you've all seen the inverse Cramer accounts, which constantly pit the retail investor against whatever trade Cramer happens to be pushing.
Yes Cramer is often wrong, and very wrong, and he's targeted, because retail money is going wherever he points, and that makes him a handy target of the hedge funds, but....
These inverse Cramer accounts are obviously fake, and used to set up the retail investor for the fall, and all you have to do is a twitter search for "inverse cramer" to find 100's of trolls/bots pushing those accounts to the top (visibility). Just yesterday, I blocked like 20 of these fake accounts, and this isn't the first time I've discredited these scam artists.
Cramer doesn't trade the $SPX. He drives big tech. You've been dupedhttps://t.co/DZJX6F4mWB
— Veteran Market Timer (@3Xtraders) May 18, 2023
Who do you think got squeezed in this tech rally? Retail investors, of course!
Luckily this time I saw this rally in tech continuing into last week's Memorial Day holiday, and I didn't find myself on the wrong side of that trade, but I can assure you that many retail short sellers are utterly wiped out.
To give you some idea: I finished covering my positions in $SOXS (the leveraged $SOX bear ETF) on 5/24, just ahead of what can only be described as a historic $NVDA earnings release.
It was the perfect swing trade!
Getting back to the topic at hand - the Options Market
In the first update in this series; I specifically mentioned the Najarian bros.; not because I think they're rigging markets, or doing anything else illegal, but because I know Jon Najarian has his hand on the pulse of the Options market.
I found this interview from 3 months ago, and he offers some really intelligent perspective, and insight, on 0 days to expiration Options, as well as the recent $VIX action, and why that doesn't seem to work like it used to...
Must Watch! He doesn't try to sell you anything, and I can assure you, I get nothing out of this.
I think I have a newfound respect for Jon Najarian, and a new way of looking at the market. Followed
This tweet explains a lot:
$NVDA SHORT SELLERS DOWN $4.1B IN MARK-TO-MARKET LOSSES SINCE MAY 24
— Market Rebellion (@MarketRebels) May 30, 2023
Massive short capitulation, as I've been saying.
Fast Money's Take
Fast money thinks the retail investor was not buying NVIDIA... They seem to think that retail investors only have enough money to buy (meme) penny stocks, as usual they are completely out of touch.
If I saw this trade coming from a mile away, and even alerted to it, then many retail investors were on board.
Trading really is analogous to a game of poker, and the trick is to not be the sucker who is left holding the bag, and if you don't know who the sucker is, then that may be you!
As far as the trade is concerned.
I continue to see money flow from one chip stock to the next.
For instance yesterday $AI was dumped, while Intel was bought, and this game of cat and mouse could easily continue into weekly Options Expiration.
Take care,
AA
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