Disclaimer
This is for information purposes only.
Discussion
Trade: 50% position in QQQ September 29 $370 puts.
Rationale: As discussed yesterday, there is building evidence of a rotation from Tech to everything else. But I said I was still noodling the implication for the broad equity market, as I didn’t think short Tech would work unless rates started to break out. Well, today it looks like that is exactly what is underway as discussed in the Market Journal post below.
We are in the window of strength so I want to be super, super nimble. I’m not going to take 100% of the trading account short until we get into that August 16-18 OPEX window, so I’ll just trade around these short-term set-ups with 50% of the account.
QQQ is outperforming a bit today, but I strongly, strongly suspect that is going to unwind here in very short order. At various junctures in 2022 Tech would do this early in the trading day before taking off as leadership on the downside. Tech was my primary short vehicle in 2022, so I am intimately familiar with its behavior, and I think that’s exactly what is going on here. The fact XLU is puking even further as I type tells me rates are a big problem here.