Everybody’s calling this a rotation back into tech, and I’m not buying it.
I sat down with Schwab Network’s Big 3 this morning and put up 3 live trades right there on air. But the trades only make sense once you see what’s going on underneath this tape.
When I look at the semiconductors, the bid back, the buy-side activity, is meager at best. What we need is that quintessential rip-your-face-off rally, and we’re not getting it.
So either this rally gets it on, or we fall flat on our face and dive right back into more sell-side activity in the coming days.
So I built 3 trades around exactly that, and all three lean the same way.
One goes after a sector that looks a lot healthier than it is. The chart shows a nice rally, but the big names you’d expect to be carrying it haven’t rallied, and one giant company is doing almost all the lifting.
Another is a fundamentals call, and the technical analyst on set fought me on it.
I’m looking a lot less at the chart here and a lot more at the economy, where buyers in this corner of the market are on strike like we’ve never seen, as far back as the data goes.
And the last one breaks a rule of mine. I categorically don’t hop on a trend unless I have a real strong feeling that something is not good, and this chart is hideous.
I named all 3 on air, and I laid out the exact spreads, the strikes, the expirations and what I’m risking on each one. I’m not going to retype any of that here.
You can watch me build them yourself, and watch Kevin Green, the chart analyst on set, try to talk me out of two of them.
Watch the full Big 3 segment here.
To your success,
Don Kaufman
