Friday's bloodbath in tech stocks was a textbook setup, but the tape reads a bit like a Hitchcock novel.
This was the biggest one day rout that we've seen since April, but what made Friday's move truly historic was the highest ever options volume in history. I always say,"it's all about the options", and the proof is in the pudding. Friday rug pull on a 10 week win streak, was actually triggered by a correction in the options market. .
- 1st clue was the Broadcom setup I alerted to just ahead of earnings, and confirmed in Friday's blog, ahead of the opening bell. [link]
- The second clue was the breakout on the $VIX. One of the most obvious setups ever.
I not only alerted to the $VIX breakout. I confirmed it (on Wed.)
Who else spotted the $VIX breaking out? None other than my old friend Dale Pinkert, over at Forex Analytix
You can tell by the number of likes on that tweet that there's a decent amount of short interest, and that sets the bear trap ahead of another 4th of July pump job (typical). That's right, they aren't finished juicing the market, just yet. Not by a long shot! The show ain't over until the fat lady sings.
The final breakout on the $VIX was above the 18 level, and that becomes the level to watch - not 20. Another critical level is the 50 day - where we saw the $VIX briefly pause on Friday, before the bears spiked the ball - going into the close.
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| $VIX alert triggered |
Now Here's Where Things Get Really Strange
Some of the hardest hit sectors were some of the worst sectors and stocks in the index- what I call junk/trash (crypto, miners, speculative AI tech, Strategy $MSTR?).
Crypto (not even considered a sector. Gold miners, a part of the materials space (not a true sector). Solar. The Semis (another micro-sector) got whacked, of course. That was no surprise, because tech is the only game in town, and semis lead tech. Tech sold off hard, and the Dow didn't offer safe harbor this time. Small caps? (risk off, sure).
I always say if you want to make the sell-off convincing you gotta sell Apple, and Google/ Alphabet (still trading above the 50 day SMA), and Berkshire, not pick and choose - selling Tesla because you don't like Elon's attitude. The other one they hate, $META was lower. Meta management took advantage of the situation by dropping some bad news on the tape, thinking nobody would notice their stock down another 5%, with all the blood in the streets?
Watching CNBC try to do damage control after the closing bell was peak comedy. Tim Seymour (producer), and eternal pumper of everything from pot stocks, to gold miners, to China - have you seen Tencent lately? 😂🤣
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| Tim Seymour pick $TME Tencent |
Spin included assurances that the economy is still broadening (blatant lie), and consumer staples (toilet paper, toothpaste), was up... and "that must be good, right"? I'm not making any of this up.
What wasn't covered on Fast Money?
1. $VIX +20 (the elephant in the room).
2. Tim Seymour pot stocks popped +7%. 2X weed ETF $MSOX (MSOS) ended the session up +14.49%. Conspicuous as hell dead silence.
3. $OIH Oil service stocks - (recommended by Seymour several times in May) down another (-5.5%).
4. Fast money favorite, gold (& copper) miners have given back all the gains of the year. Crickets
Makes you think the show is all smoke and mirrors right? Case solved!
I think we could see a little more fallout on Monday. Buying a 1 day pullback used to be a rookie mistake, but today it's the new normal. EVERYBODY PILE IN!
Seriously: I was lucky enough to see Friday's bond rout coming, as well as the $VIX breakout, and the rest of it, but trading it is never easy. In fact today's market environment is harder than it's ever been.
Same sector - only sector - that can lead is the same sector that's led the entire bull market. Big Tech - disguised as something new AI. #BuyTheDip
$BOTZ Global X Robotics & Artificial Intelligence Thematic ETF - Bullish af
P.S. Edit Monday 6/8/2026:
