This is issue 11 of The LongVol Report.
Good afternoon from St. Thomas….
I am here for a few more days to get away from the day to day flow in Puerto Rico and when I can move around it helps me think. Right now, I am finishing the final videos for the FPT Training - really excited for this one and it’s taken a long time to build. I’ve been scootering around the past few days and got in a quick run this morning before sitting down to finish this weeks report.
(From the run this morning, some big boy yachts and to the right where I am writing this near St. Johns Island. I was talking with a friend of mine this morning about the markets and he asked why I don’t take a break….I gotta tell you all…in 10+ years it’s been hard to take a break because it’s just enjoyable and right now with so many tech stocks on highs it’s time to cash in. Plus, this report gets put together every weekend and that keeps me in tune with the markets so I can stay sharp.
There was a Pirate Flag yesterday at a famous bar here called Duffy’s - reminded me of my earlier years and a fund called Pirate Capital - they had a fund called “Jolly Roger” and it was just funny to see this thing being down in these parts of the world.
It got me thinking about that era (pre-2010) and I can tell you that cycles come and go as do certain edges. Part of making money through cycles is understanding what’s in play and what’s not. Whether that’s commodities, tech, mid-caps, small-caps….to me as a long/short trader it’s always the same….you just follow the money flows but thinking back to that era really had me thinking about how so much has changed, for the better.
Okay…enough of that….on to the markets.
The Week Ahead.
We have OPEX this week and this wraps up Q1 for 2024 and the move last week on Friday was insanity that I was glad to be a part of. Parabolic moves never stay like that (even pre 2010 time) and they always blow up. The key is, how you trade them. Back then I would short equity and you could wait for the move to happen and not take a lot of heat, today, the markets have changed dramatically. The shorts are 1-3 days at a time and sometimes intraday which took me a while to really wake up too. I certainly think the influx of short-term options trading (the weeklies released in 2011) has a lot to do with the heightened vol and these moves whipping around like this.
That’s a key thing to recognize and I still have some friends in the money management business (in fact got emails this weekend about NVDA) thinking in terms of tops or bottoms. Maybe when you run hundreds of millions and a few billion like one of them you can afford to put a 2% equity short on and stay short…I can’t do that. Plus, these moves 1-3 days are enough to make a fortune on if you are focused.
Last weeks report title was “Volatility is The Regime” - that likely continues into OPEX this week and with everyone of these portfolio managers who were max long these stocks cashing in to secure the end of quarter gains…..trust me they’re going to and Friday was a sign of that.
S&P500 - $5180-$5200 is a spot to watch this week. As long as sellers control that area and keep us below that this market should see selling pressure all week. The potential to trade $4900-$4950 this week is something that is on my radar and if with so much data again this week that could be the driver (in addition to profit taking) among other items.
Again, to those reading this with a clear mind; it’s the TRADING of the market that matters. Many of you I think like to put “trades on” and price forecast hoping your thesis works out. That worked years ago….this era is volatile so it requires actual trading, at least for me.
Let’s get into Report 11 and talk about the breakdown for Premium Members.
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