Well yesterday was trading Heaven, absolute screamer of a day pushing the options chains to their max. However, what you may have also noticed is the IV crush at these extremes. Calls dropped midday even with prices remaining stable and some puts increased even with the underlying increasing.
ARKG greatly outperformed XBI and the rest of Biotech as a small bid entered, still early stages and expecting a lot of chop. Too many names and sectors are hyper extended, whether their inevitable pullback slams everything is yet to be seen.
It’s taken me the weekend and yesterday to catch up with what’s been happening, currently spending most of my time reading earnings report and other releases.
The energy positioning still astonishes me, there is either no 2nd industrial revolution and a big deflationary event is on the way, meaning everybody is right on their shorts. Or people have got too carried away with Nuclear and alternative energy forgetting just how long it will take to come to fruition.
The whole “drill, drill, drill” is also very bullish for names like OXY whom have sustainable supplies with a break even price of $40.
Let’s face it, with everything taking place the long Oil & Gas seems
A: Boring
B: Fucking ridiculous.
There are many nice setups in the Space, including XOM and gas focused names that have already moved LNG EQT etc.
The other thing I don’t truthfully understand is how the consensus of Trump being in power is bearish for China. I mean, you could shout and scream about the tariffs or you could look at the facts. Almost 20% of Apples sales are China, 39% of Teslas deliveries originated from China. For names like LVMH the Luxury goods market is worth $300bn.
So you’re telling me, Musk is going to be fine with said Tariffs and disrupt 40% of his supply chain?
I think what happens is an agreement is reached to benefit both sides, Trump is made to look good for striking a good deal with the Chinese and the whole “Trump is bearish for China” falls apart.
Right as the Chasers are liquidated and the shorts pile back in.
In terms of current market conditions, we’re short term extended and that’s and understatement. Absolutely insane moves for some of the smaller cap names and specifically those fitting the theme. What I mean by that, is anything that fits the Trump & Musk Theme.
You can now expect any news relating to this to be treated with over-reactions to the upside (when bullish).
So as far as I see things, now is not the time to chasing what’s already moved. It obviously needs to Yank back and form a whole new base. What we need to be focused on is what’s next, don’t let recency bias take ahold.
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