2/13 Market Plan

Outside Day Reversal & Core CPI

SPY 0.00%↑ and QQQ 0.00%↑ today were textbook outside day reversal trades in a market that just won’t stop. But, we have Core CPI tomorrow and that is a catalyst for price in the momentum sector which matters for me.

I’ve been talking about these highs for a while - we are in a zone on SPX where the odds of a reversal start. That is derived from my market-timing analysis which is technically analyzed.

That expectation leads me to lean toward:

• Caution on net longs

• Expectations of light buy side flow

• Expectations of outside day reversals

This is how you are NOT caught off guard because you have an approach to tell you when to press bets v. an approach that takes an “anything can happen today” mindset.

NVDA 0.00%↑ came off those highs well today and I was short some that and am taking some home overnight into this CPI data tomorrow because I just can’t live with myself if these rolls with me having no exposure on it.

Without going into too much detail the way that I look at stocks/themes that go parabolic is like anything else: when does it roll over? That’s where the thought process starts but it doesn’t end. The structure of a trade idea matters just as much as the idea generation - a concept Retail Traders seem to (or just have never learned) forget or just don’t care about.

Mark Spitznagel of Tail-Risk firm, Universa Investments (and who can explain tail risk better than me) is one approach to take to situations like this.

The problem is, most retail traders I’ve seen trade take the OTM approach on everything and they just keep making Ken Griffin and guys in the industry with dumb bets. Not saying that NVDA 0.00%↑ deserves that lens/approach but I am saying that downside risk in situations of irrational exuberance are sometimes warranted.

The difference is instead of betting the farm on it, it can be a small position - something that is important in portfolio management and not a concept that most degenerate day-traders can fathom.

So, overall, still no change in views on the market just sharing that the ranges on NVDA 0.00%↑ have been great for intraday trading so it’s hard to deviate into other intraday playbook trades.

We also had someone who is in DeltaOne and did the Mastermind (now Active Trader Mentorship) break his highest P&L Day ever. Good to see and hear and testament to what focused and systematic work does to generating returns.

ARM - That stock is just on fire and being that it almost doubled in a few trading days it makes it on to my list of active-trading ideas. The downside is that the IV is way too high on the options making it too expensive to go directional with but there is a trade there to be had which I’ll get into in the Premium video.

SCHW/GS/Banks - The banks are all trading well and SCHW 0.00%↑ is has been on my list and makes it back into the portfolio. This was a large mid 6-figure position after the SVB crisis last year (winning!) for me - I explained the whole thing on this old post here. With Goldman GS 0.00%↑ on the verge of taking out it’s ATH it makes it hard to be overall bearish on the market at large - but again, who cares about the market at larger - we’re absolute return traders here, not tied to the SPX!

In the Premium Video Tonight I Cover:

• S&P500/Nasdaq/Crude Overview

• CPI expectations

• ARM: How to avoid making a silly directional bet on it now

• Outside Day Reversals Explained & How to Use Them