Blake Young pulled up the volume chart today. The S&P 500 is now averaging 34 million shares a day.
In April that average sat at 110 million. Last August it sat at 62 million.
We’re running at a third of the spring peak. We’re at half of what this same stretch of summer produced a year ago.
Summer explains part of it. It does not explain half.
The tape agrees with the volume. The S&P 500 broke above its multi-decade channel, then fell right back inside it, and it’s retesting that old resistance as resistance again.
Chaikin Money Flow crossed down at the same time. Blake reads that as net selling rather than traders simply closing out positions.
Then he showed where the money went. The goods trade deficit printed negative $118.8 billion.
From 2015 through 2020 that number lived in the $60 to $70 billion range. The last three prints came in at 105, 101, and 118.8.
Blake’s conclusion is blunt. Capital is not coming into the country, so lending is getting tight, and equities are competing for a shrinking pool of dollars.
Here’s the part that turns into trades. Blake asked what we actually export.
We export technology. Technology needs cheap money. We also try to export lending, and that lending is slowing down.
We don’t export consumer staples. We make them here and we consume them here.
That splits the board for him. He’s fading banks specifically, not financials broadly, and he’s rotating into staples that pay him to wait.
KRE already confirmed it. The regional bank ETF sold off on heavy volume, broke the previous lows, and followed through today.
Here’s what Blake walked through in tonight’s video:
- Bank of America gapped down and closed down on average to higher volume with a negative Chaikin reading. Blake measures the 65 to 61 drop and projects the same distance again, targeting 57.
- The September 18 short call vertical sells the 62.50 and buys the 64 for roughly $0.40. That’s about $0.26 per dollar wide with only 22 days of exposure instead of 29.
- Blake prefers the long put diagonal. He buys the October 65 put near 70 delta and sells the September 60 put at 31 delta for a $3.66 net cost on a $5 wide spread.
- Rolling that short put down toward 57.50 could collect another $0.70. That leaves roughly $3 of cost against $8 of width, so he only needs to be right about 37% of the time.
- Kraft Heinz at the money September 25 puts pay 3.5%. Assignment drops his cost basis to $24.20, then the 6.38% dividend and 1.75% monthly covered calls stack toward 30.8% a year even if the stock never moves.
The Kraft Heinz setup is the one Blake wants to hold. It gapped down, closed up, filled the gap, and crossed over on the Chaikin at support.
He doesn’t need it to rally. He gets paid on the put, the dividend, and the calls in every scenario.
Volume that thin makes moves messier than they look on the chart. Blake is positioning for the drain to continue.
