Don Kaufman here.
This morning on Schwab’s Big 3 Show, I warned about something most traders are missing.
Stocks hitting all-time highs while economic weakness builds underneath. “Bearish feel out there in the marketplace,” I said – but these names keep climbing anyway.
Amazon just gained $200 billion in market cap off a $38 billion OpenAI deal. “Does OpenAI even have the capital?” I asked. Nobody’s questioning it.
But I positioned for reality. This morning, I outlined three specific trades targeting this disconnect:
GOLDMAN SACHS (GS) – BEARISH
“We’re hearing about economic weakness, possible slowdown in GDP, government shutdown, lack of IPOs,” I said. “And yet Goldman sits at or near its all-time high.” With financials facing headwinds, I’m positioned for the pullback using December put spreads.
HIGH YIELD BONDS (HYG) – BEARISH
Here’s what caught my attention: “Repo markets under duress and needing injections of liquidity.” When financial stress hits, “this is typically where it will show up” – in junk bonds. January puts targeting the breakdown.
AMAZON (AMZN) – BEARISH
My exact words: “AI right now is simply off the rails.” That gap from $230 to $260? “That gap print looks to be fading.” Using January put spreads to capture the retreat back to reality.
Three trades. Three different timeframes. All positioned for when this disconnect corrects.
The AI euphoria is masking real financial stress underneath. I’m betting on gravity.
WATCH MY FULL BREAKDOWN WITH TRADE STRUCTURES
The market’s giving us gifts at these levels. I’m taking them.
To your success,
Don Kaufman
