I am stuck by this consistency among the indexes: Tuesday was a hammer candlestick in every case (or a hanging man, if you prefer). The reason? It’s anyone’s guess, but my theory is that traders know the market is historically overvalued and it SHOULD go lower (hence the weakness midday) but they reflexively bid prices up based on any sniff of weakness. Still, this is the first decent selling we’ve seen since March 30th, and I wouldn’t be surprised to find out something bigger has just started.
I’ve swapped out one anchor position for another. I dumped my DIA puts earlier today and decided to replace them with TLT September puts. As I’ve mentioned, interest rates have been defying their breakdown for months, and for a variety of reasons, I see these as headed much higher. Warsh can’t change that.
I’ve been impatiently waiting for Bitcoin to break for weeks. We aren’t there yet, but we’re very, very close. It briefly crossed below the psychologically important $80,000 level earlier today, and it is pressing against the trendline. It has NOT broken it yet, but if it does, that’ll be a positive development for the one or two Bitcoin bears on the planet besides myself.
Unrelated to this, I took 120% profits on my SMH puts I bought yesterday. I wouldn’t be surprised if they go up more in value, but I’m just not emotionally designed to deal with stuff that expires in a matter of a few days.
As most of you know, the options trades that I do place tend to be exceptionally conservative, focusing on in-the-money puts with many months of time left on them. Yesterday, though, when I saw the video of Paul Tudor Jones (a hero of mine from the late 1980s) plunging into the semiconductors since he figured we were just starting to go up in that sector, that sent me over the edge. I did something I hardly ever do, which is buy very aggressive puts: specifically, SMH $580s that expire on Friday. I’m up 117% so far, so………bite me, PTJ, my former hero!!
