Market Milestones: Burry Me in Puts

[Image] SPY DIA IWM [Image]( [Image]( [Image]( Good morning , Exactly a month ago on July 21st we sent out the [chart below]( and warned of a coming pullback in the markets. The QQQ has been leading the SPY all year long and the QQQ gave us our first warning of this pullback with the July 20th gap down. It was the 2nd largest down day of 2023, closing below four prior candles with increased volume. The gap and go on August 2nd confirmed the pullback with a lower high, lower low and double top on the QQQ. Just 2 days later on August 4th, AAPL, the largest company in the world and largest component of the SPY and the QQQ, gapped down on strong volume. We saw some tech get crushed over the past few weeks but all in all the selling was fairly controlled. This Tuesday, August 15th, we lost the DIA to a bearish gap and go and IWM ramped up the selling that started at its overhead trendline in late July. Man, oh man does sentiment shift faster than Ricky Bobby on race day. Two weeks ago, if you mentioned buying puts you were mocked by the aggressive perma-bulls. Now those same bulls are gobbling up puts, watching The Big Short and changing their X profile picture to their new hero Michael Burry. The fundamental question that each of us must ask is whether Michael Burry's [latest prediction]( holds true, indicating that the top is in for 2023, or is there potential for another high prior to a potential recession in 2024? You can see from my chart on July 21st that I was, and still am, in the camp of one more high this year. However, I will pivot and change that tune if key supports get broken and key players start to fall. An important indicator for me will be how NVDA reacts over earnings next week. NVDA has been a bellwether for the 2023 markets. Its blow out earnings and monster gap up in May lit a fire under the bulls and helped propel the QQQ 17% higher over the next two months. It has formed a very strong support at $404.00. If NVDA gaps below support and shows strong indications that it is going to fill the gap back at $300.00, that could be a signal that more selling and weakness is ahead for the markets. However, if it holds strong, opens flat or even gaps up despite its monster extension, that will be a good sign that bulls remain resilient. Even if we see new highs later it the year, the charts look like they still have lower to go in the short term. Considering how extended the SPY is right now to the downside, a bounce into $443.00 could be an area to load back into some shorts. QQQ July 20th 2023 [Image]( QQQ August 17th 2023 [Image]( ETF of the Week This week’s ETF of the week is iShares Semiconductor ETF (SOXX). You can learn more about SOXX [here](. The top stocks that make up SOXX in order from largest weighting to smallest are: NVDA, AVGO, AMD, INTC, TXN and ON. SOXX closed below Monday’s bullish light saber candle almost immediately, which is certainly not bullish. The only one of the top 6 stocks that is still holding up is, you guessed it NVDA. If SOXX can bounce over the next 4 days prior to NVDA earnings, it could give great risk reward for a short trade over earnings. This short would be anticipating that NVDA either does not gap or gaps down. If that happens, a SOXX short could be a great hedge on a bullish portfolio assuming our hypothesis above plays out. SOXX [Image]( Enjoy your weekend, Yates Craig, RLT & TPN Market Analyst Disclosure: You are responsible for your own trading decisions. ALWAYS, do your own research before investing in any of the above securities. This is not a solicitation to buy/sell ETFs or securities. NEVER invest money in ETFs or stocks that you can't afford to lose. You can lose all of your capital by trading any securities mentioned. These ETFs/securities are very volatile and gain and lose value quickly. We reserve the right to freely trade in any mentioned ETFs or securities. We are not compensated by any mentioned companies. We trade ETFs and securities based on our opinion of intrinsic/possible future value only. We are not registered investment advisors, so always do your own research before buying any securities. Unable to view? Read it [online]( If you no longer wish to receive mail from us, you can [unsubscribe]( Sent from: Real Life Trading in Nashville TN 37221