Welcome to the market recap for Monday March 5th, 2024. The plan for members is below in the paid section so let’s get started.
There’s the risk-off we needed, and it was the ISM print that did it, but you don’t have to be a genius to look at probabilities and see that things needed to come in — reading options flow data certainly is not going to tell you that either.
Situations like this are really good for sizeable shorts on market indices and select high-beta stocks because of the vol expansion and coming into this week I talked about it being high vol because we have a lot of data, technicals showing weakness and no monthly painting the tape shenanigans to worry about.
Nice day for some shorts and profit taking.
Big news day tomorrow still so that’s part of why the covering: I am uncertain if we checkback higher and booking P&L is the name of the game.
I am long some tail-risk shorts as of today and plan to hold those through March OPEX because if we lose $5005 on S&P500/ES futures we have an issue and I think we get taken down to $4770-$4800.
$5110 tomorrow has to be regained (which can only come from a positive data set tomorrow) if not $5040 is on deck which means light longs on some names at/near there but with a bias on longer-term shots.
Three weeks ago, in Issue 8 of the report I said this:
If we lose $5005 then there’s an issue this week and especially given, we have data on Wednesday and Thursday that may just happen. Regardless, if we stage a rally above $5066 you just won’t catch me long any beta and/or SPY -1.14%↓ calls. I’d rather sit it out and pick my spots to hit a larger index short, which, I think is close.
I feel the same today. No issues with light longs intraday here and there but sizing down and focused on net short ideas.
Moving on….
NVDA - $865 is key tomorrow for the resistance and $835-$840 is support. I’ve talked about this to members a bit in DeltaOne but I’ll share a few thoughts here. I don’t care if this stock goes to $1,500 or $600, the way it’s trading right now is enough to make a lot of money on and at the end of the day it’s how you utilize vol to your advantage, so all these price target calls are worthless.
MSFT - Terrible rejection at $415 and $410 broke so I was short this heavy today and re-shorted around 3:30EST because this looks bad and $390/$385 might be on deck, in fact, I think it is hence re-shorting and carrying risk overnight.
Sometimes, at the highs, it gets surgical with entries, and I usually size down risk when I think the overall market is risk-off so this week on MSFT I knew it could breakout if we triggered but we failed. That failure meant this leg down which means increased size in the book.
I’ve always found it important to size up during market shifts because the rest of the time we’re just waiting on the next quarter earnings so for the vol/momentum trading I try to take advantage when it’s flowing.
SOFI - $750 million in convertible notes issued, not a surprise for them to do that but when you go to X/Twitter and search this tag it’s the usual guru dickheads with their head and shoulders shampoo patters/trend lines talking about it. I talked about this stock Sunday. I don’t like it, however, they might turn it around eventually and that eventually is probably in 2-3 quarters at a minimum. So, if we get down into $6-$7 and hold there for a few weeks (consolidation for you technical bros) I’ll pick up some LEAPs and hold them as a long-term speculative long in my portfolio, primarily because it’s going to take a few quarters to turn this around but if they get it going it gives me a cheap cost at owning the equity.
TSLA - I am long a little equity on this and sold some put spreads. We’re at a key spot on this and $190-$195 is my soft target. Small position for me that I probably get rid of by end of week. The technicals don’t look great but for a check back tomorrow into data this will do.
New Consumer Cyclical Short - I got short a name today that should, by my account, drop -20% or so in the coming months. It’s something that has been on my radar for a while and I’ll get into a write up on it in DeltaOne later this week. Right now, the economy still feels topped out and inflation is raging, and this name has been repricing that with then consumer feeling the pinch. I’ll give you a hint; their CEO is active on X and there is an age requirement for their product.
More this week on that!
In The Premium Video Tonight I Cover:
S&P500/Nasdaq/Oil Analysis
A look at MSFT & META from Technical
A Lesson on LEAPS v. Short Term Options
Intraday Long Flow Ideas for Tomorrow
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