Financial News vs. Noise
There is nothing better than a nice selloff in a bull uptrend. Like clockwork they reversed most of Wednesdays’ selloff. This morning we have a bunch of data, most notably PCE. I have been watching SPY put implied volatility all week and it finally spiked yesterday for today’s puts. If we get a cool number watch for volatility to sell off further. If we get a hot number that could be a problem. I continue to have puts on VXX and UVXY after Wednesday’s spike. Remember these are horribly designed products and volatility needs a reason to stay elevated.
I have been talking about China, specifically that you rent it, you don’t own it. We played it to the long side early in the week and came within inches of shorting BIDU and KWEB yesterday. Overnight China released new rules to tighten restrictions on online video game sales that look to be tanking their markets. Global Gaming Shares Fall After Draft China Rules Released-WSJ. I know a lot of people on Fintwit are long Chinese names. Eliant Capital has a great substack, the only one I read. He had a great quote about China this morning and the possible cause of the the selloff:
Nothing else to stand out today… pretty good day for China today, but more curious to see if China gets a day two as China NEVER gets a day two. I shouldn’t have even said anything as I probably just jinxed it ;(
We continued to add commodity exposure buying CF and BTU. CF was interesting as it had some big call buyers yesterday in a name that typically doesn’t have great options volume. As I have said before, I love the commodity theme going into 2024 and a lot of people are way underweight. Speaking of commodities, gold and oil both look strong this morning, but PCE could easily change that.
In earnings news Jim Cramer called another one. Right after the FDX debacle another Cramer fav is getting crushed. Nike shares dive after company eyes $2 billion in cost cuts amid ‘softer’ outlook-MarketWatch
This isn’t a bad idea actually. Forgetting about skill for the moment, the big guys take a long time to make moves, and are often way offsides. I do like commodity and energy names here and if they have to scramble to add exposure so much the better. These are the most hated assets on Wall Street — it might be the perfect time to buy them-MarketWatch
Always hate to see 0DTE vilified. Any asset can be risky depending on how you use it. I run a 0DTE strategy daily, that I would argue is pretty conservative. Here are the risky options being linked to the sudden demise of Wednesday’s initial stock-market rally-MarketWatch
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