This morning was the unspoken holiday of the financial markets. It was Yom Kippur, and it landed the Monday after a major options expiration, so a huge amount of risk had either rolled forward or come off the board entirely. 10 minutes into the session, the S&Ps were barely printing 3,000 contracts a minute.  It was a light and fluffy trade. The S&Ps still blew through the $42 expected move for the day almost immediately.  By midmorning they were more than halfway to the $98 expected move for the entire week, and everybody wanted to call it a rally. We’ve been a stone’s throw off the all-time high for months, people. At-the-money options with the whole trading day ahead of them were going for 88 cents this morning, when on any other day at that point in the session they trade for $1.35 or $1.40. Implied volatility got the life

Stand at sea level and you can see about 8 miles. That’s the horizon. Past it the water curves away and you’ve got nothing, no matter how hard you squint. VIX measures 30 days out. So when somebody asks me where VIX is on a day the tape is getting kicked around, my answer is that VIX don’t work here no more. It’s over the horizon. It’s measuring something you can’t see from where you’re standing, and it’ll sit right there while the risk in front of your face does whatever it wants. What Moves It Correlation. VIX wakes up when the market stops rotating and starts going down together. The semis go, AMD goes, the whole complex goes at once. That is the only thing that gets it off the floor. Which makes rotation the thing holding everything up. Money comes out of big tech, lands in financials, the

At 2 PM ET today I’m handing 1 person watching the livestream $2,000 in cash.  You have to be watching live when the name gets pulled, and that’s the only rule.  We’ve done this before and we’ve paid every time. The reason I’m paying somebody to be in the room is what goes on the screen.  THE SWITCHBOARD has never been shown in public.  It’s 1 screen that shows the price that’s going to decide the day before the market opens, and the trader who built it spends 6 minutes on it each morning, leaves 1 order sitting at that price, and doesn’t look at a chart again all day. Over the last 4 months that added up to 71 documented trades and 90.3% on a $1,000 base. Every trade goes up today, and so does the arithmetic behind 50% in 90 days, taken straight out of the record. I’ll

It’s still a little difficult to believe. 90% probability of a hike today, and everything going on in Main Street is so far removed from what we’re seeing on Wall Street. Look at oil prices, look at diesel. That’s a shock to the system we probably haven’t even felt yet. I was on with Schwab’s Big 3 this morning with three ideas, so let me walk you through them. There’s a sector that has hit or exceeded the lower edge of its expected move for five consecutive weeks. Count them, five. The option market says it should travel three bucks and it’s gone further than that every single week. That’s some fierce sell side activity, and it’s left statistically wild oversold conditions behind it. I’m a contrarian in there. I’m looking for a brief but violent move back to the upside, and I used a $5 wide call spread to

Most traders are staring at the right screen and reading the wrong column. They pull up probabilities and read the one for the expiration they’re in. What are the odds this thing finishes in the money on the 18th. Fine.  Except that’s not the trade you’re making. You’re not holding to expiration.  You’re getting out when price touches your number, and those are two completely different questions with two completely different answers. The Two Numbers I’ve got a position on in Meta right now, and it’s sitting around $670 at the open. If I read the expiration column, it tells me one thing. But what I care about is whether price touches $655 or $650 before I’m done, because that’s where I’m out profitable. Probability of touching that level out at expiration? 73%. Probability of getting there this week? About 44%. That second number is the one that matters to

I made 56% on a one-day trade and I had no idea it was coming. Put a bearish position on in the semiconductors Friday at $1.15. Closed it this morning at $1.80. One of the bigger one-day gains I’ve seen. And I’m going to get emails today telling me I was spot on, so let me stop that right now. I did not put that trade on because I thought the world was going to fall apart over the weekend in AI. I didn’t know that was coming.  Nobody did. So let me tell you why I took it. The volatility in the semis has been great lately, and this is not my normal setup. I like three standard deviations, yada yada yada. This thing was a chopped out wonder fest, and that’s why I did the trade. I took the bearish side because the skew was a little friendlier

We opened on a positive 1,200 tick and I’m not buying it. Best advance-decline line since April, ticks raging strong right out of the gate, and somebody out there is looking at that going, well, that’s bullish. Think again. Do not take the advance-decline line the wrong way. What you’ve got is full-blown correlation, and the second that showed up, all the sector rotations died out in seconds. Everything was silenced. Now look at energy. Oil was down 3.6% and the XLE was up $0.11 this morning. Would you expect the energy complex to be green at all with crude getting hit that hard? It’s decoupling.  The XLE is decoupling because the correlation to the S&Ps is so freaking strong that energy quit following its own commodity. So this isn’t a bullish or bearish indicator to me.  This, for today, is about the market moving as a unit. Which means

I am all bearish with no place to go right now…  And you know what? That has been working. This morning on Schwab’s Trading 360 I walked through three live trades. Here is what I was looking at: A discount retailer holding up better than everything else in its sector. That relative strength is exactly why I am fading it. A healthcare name up 40% year to date, completely untouched by two days of sector carnage. I am using that against it. A major tech product launching today at a price point that made me laugh out loud. I am fading the launch. Done. Oh. And this all hit on the same morning Treasury tried to put a lid on yields with a $6 billion buyback. Yields went higher anyway. I noticed. All three trades are in the episode. Charts, strikes, expirations, the whole thing. ⇒WATCH THE FULL EPISODE To

There’s a price on your chart where the machines wake up. It’s not marked on a chart or anything drawn up.  But when we cross it, volume detonates and the whole thing gets faster than it was a second ago. I’ll tell you what it is in a minute, but first understand why I’m bothering. Hands and feet inside the vehicle, because I have no feel for this market. And if you think you’ve got one, I promise you don’t either, because nobody’s had a feel for months. Which is exactly why the one thing I do know is worth your time. It’s the overnight low. Now I know what some might be thinking, because overnight trade is garbage. Where the futures sat at 3am tells you nothing about where we close and I’ll keep saying that until I’m six feet under.  That’s about direction, but this is something else.

Somebody told me you can’t sell five million shares quietly. That’s a bunch of nonsense, and I’ll show you exactly why. Start with what’s on my screen. Seventy thousand contracts in a single strike, eight minutes into the session. More size than the SPDRs do in the same window most days, in one strike, in one name. You think somebody woke up in love with the company? Nobody’s buying that stock because it’s a good company. They’re rushing the marketplace and buying calls, and the stock follows along behind them. The mechanic is simple enough. You buy a call, a market maker sells it to you, and now he’s short upside he doesn’t want, so he goes and buys stock to hedge himself. That buying is what lifts the price. The hedge is doing it. Not the earnings, not some fund building a position, not a guy in a leather