Midday Market Update

Hello!

This will be my last post for the next three days as we celebrate my daughter’s transition to college with her graduation today & festivities tomorrow & Sunday. This is a very important moment for our family. I apologize that I won’t be able to reply to comments until Monday but I will try & get to them all.

In addition, I am publishing a special post on Monday to address several subscriber questions in one essay.

The purpose of this DMR is for me to do research so you don’t have to.

This is why I stated the following in yesterday’s “Midday Update”:

The Non-Farm Payroll figure came in nearly double at 115K. This is why I also felt yesterday was likely a bear trap when SPY reversed off $736.13 & closed red:

During the dot com era I would swing CSCO, BRCD, Motorola & Sun Micro for $30-50 per share gains in a day or two. This went on for weeks. Hence, Exhibit A: (Micron stock (MU). I know a person who flipped it this week in 48 hrs for a $100+ share gain. No news, no earnings, just FOMO. This is not normal, this dot com era style-price action.

When will the music stop? We didn’t know it would be March 24th, 2000 then & we won’t know now. What I can say is the negative divergences on SPX and SPY are getting so profound it’s beyond anything I’ve seen in 26 years. Period. Full stop.

As I type this oil is back to $100 a barrel, the VIX is up slightly to 17.3 & bond yields are down a tad. Also the Michigan Consumer Sentiment number (prelim) issued today is at a 70 year low:

Next Tuesday is the CPI print (12th) & the Trump Xi JinPing meeting is the 14th-15th. If SPY tags $740 I will take my first trade of SPY puts since April 14. As I explained this morning in the option positioning narrative, “If there is a true trend transition rather than a fear spike, then scaling from “probe size” to “core size” can make sense. We aren’t there now. SPX and SPY haven’t even closed below the 5 DMA!

My approach will be a staged entry rather than taking one large put position at once. You need to consider:

• starter size on trigger

• add only after confirmation

• largest size only after trend acceptance”

As I also stated yesterday, I am no guru & will NOT call a TOP, but this current price action I’ve only seen one other time since I began trading & it was the 6 week period from mid-February to March 24, 2000.

My intention is to capture a majority of the move when it breaks, & it will break.

Have a wonderful weekend with your family, friends & pets. 🤝

Sincerely,

John