84% of the S&P 500 has already corrected 10% or more. It gets worse. 59% of the S&P 500 is in bear market territory, down 20% or more. Listen to me, almost 60% of the index is in a bear market, and the index itself is sitting near an all-time high. So who’s holding it up?  A handful of stocks, maybe seven to 10 of them, are holding the entire thing together. They’re big enough to do it, and they’ll keep doing it as long as they stay up. How Many Walmarts Fit Inside One Nvidia Everybody agrees Walmart is a big company. Call it a $900 billion company. How many Walmarts would fit into the market value of one Nvidia? About six, and that’s a stupid number. So the market can rotate all it wants into the stocks that got left behind. You would need six other companies the

SpaceX fixed Starlink’s biggest weakness this week. If you’ve never used Starlink, you put a dish about the size of a pizza box outside and you’re connected. I’ve sent text messages by satellite miles out in the open ocean, with no cell service and no land in sight. But Starlink has one weird problem.  You need a clear sky, or what the engineers call line of sight. Satellite signal doesn’t pass through walls, and AT&T’s CEO has argued publicly that this would keep Starlink from ever competing with the phone companies. The Old Walkie-Talkie Spectrum That Crushed The Phone Stocks Spectrum is the slice of radio frequencies a phone network uses to send signals, and the government licenses it like real estate. Remember when you could use your cell phone as a walkie-talkie? That was Nextel, and it ran on 800 megahertz. 800 megahertz is freaking awesome at passing right

This morning I closed half a trade for roughly a 300% gain. I’m holding the other half, shooting for a grand slam home run, something like 700%. And not long ago, I had 14 or 15 losing trades running one of my strategies. People turn on you during a stretch like that…  You had five losing trades in a row, they tell me. I’m like, I know, man, I’m going for 10. Most traders judge a strategy by its win rate, the percentage of trades that make money.  A professional judges it by what’s left at the end of a string of 100 trades, because the win rate leaves out the size of the wins and the size of the losses. How One $700 Winner Pays For 6 Losing Trades Say you risk $100 on a trade that can pay 700%, or $700. You only need one of those to

Only one of my 3 trades on Schwab got pushback. This morning, I joined Marley Kayden and Kevin Green on Schwab Network’s Trading 360 for their Big 3, and I laid out 3 trades, each with the strikes, the expiration and the price. First up is a bounce trade in something that just got hammered as the dollar ripped higher. I’m not looking to own it for the long haul. I’m looking for what traders call a rip-your-face-off rally. My second trade is a short. A big-name stock just bounced inside what I think is still a downtrend, and I’m using that bounce to bet against it. Kevin disagreed with me on this one, which doesn’t happen often, and he lays out exactly why on the chart. And the third is in a market where the options are priced like nothing can go wrong. I think that’s a mistake, and

Oil traders are pricing a spike about the same as a crash. Go 42 days out on the oil futures options, with crude around $87 a barrel, and look at the implied volatility, the number that sets the price tag on an option. The higher it is, the more the option costs. A put, which pays off if oil falls, $10 below the market at the $77 strike has an implied volatility of about 47%. A call, which pays off if oil rises, $10 above the market sits at about 47% or 48%. In other words, a bet on a $10 drop and a bet on a $10 jump cost about the same. The gap between those 2 numbers is called skew, and it tells you how much extra traders will pay to protect themselves from a move in one direction. When traders are scared of something, they pay up

This morning, 50,000 Microsoft calls traded in the first 3 minutes. The wild part is Microsoft did nothing before the bell.  But once the market opened, a call-buying program hit, and within 15 minutes, the stock had already moved as far as the options market expected it to move ALL WEEK.  You’ll see moves like this again, probably this week. Before you touch one, run these 3 checks. First, look at where the options traded. On your platform’s options time and sales, every trade shows whether it went off at the bid, the ask or somewhere in between. This morning, 17,000 of those Microsoft calls traded at the ask or above. That means buyers weren’t negotiating. They were sweeping, buying everything the market makers offered, at any price. When you see that, you’re looking at a program, and programs can stop as fast as they start. Second, measure the move

My favorite trade this week is bullish for bearish reasons. On Friday, I joined Marley Kayden and Rick Ducat on Schwab Network’s Trading 360 for their Big 3, and I laid out 3 trades, with the strikes and expirations for each one. One is a bearish spread on the retailer I think is next to fall, while Walmart and Costco are already getting hit. Another is a bullish bet on a sector that’s been pummeled this year.  I’m only making it because I’m looking for tech to sell off in the next few weeks, and when that happens, I expect the money to rotate somewhere. And then there’s a short-term call spread on one of the biggest names in tech, set up for a gamma squeeze.  In a gamma squeeze, traders pile into calls, the market makers who sold them have to buy stock to hedge, and that buying pushes

The bond market got the data it wanted on Wednesday, and it still couldn’t rally. The PCE inflation numbers came in soft, and the prior month was even revised lower. Bonds popped 11 ticks, about a third of a point, which is exactly what you’d expect. Then they gave it all back, right to unchanged, on huge volume in both the 10-year and the 30-year. When a market gets good news and can’t hold a rally, you pay attention.  If the bonds keep selling off, it’s over for the S&Ps. They’ll come for the S&Ps, the Nasdaq, the whole thing. There is one thing I’m watching on the other side.  Bond volatility has soared in the last couple of sessions, and the implied volatility rank on long-term Treasurys is in the 68th percentile, with volume spiking hard. That combination can mark a short-term bottom. The bond market doesn’t often blow

Nvidia just paid for its own buyback by announcing it. This morning, Nvidia(NVDA) said it’s adding another $150 billion to its share buyback, bringing the total to $235 billion. The company called it the largest buyback authorization increase in history, and the stock jumped about 3%. Now do the math with me. Nvidia is worth about $5.5 trillion. 1% of that is $55 billion, so a 3% move is roughly $165 billion of market value. That’s more than the buyback itself. You just financed your entire share repurchase program by stating that you’re going to have a share repurchase program. Even with $165 billion of Nvidia pushing it higher, the S&P 500 was still down about half a percent this morning. How is that even plausible? It tells you how deep the selling is everywhere else. Financials are taking another hit, utilities are getting smoked, and retailers like Nike and

A $2 trillion company just priced in a crash to the upside. Go a week or 2 out in its options chain and you’ll see what I mean. The calls are pricing in a bigger move up than the puts are pricing in a move down, and in a company this size, that is just wild. Normally it runs the other way. Puts cost more because people pay up to protect themselves from a crash, and calls cost less because stocks usually grind higher. Traders call this an inverted implied volatility skew, and it’s not something you see in everyday markets. I don’t think it lasts. There’s going to be a day, probably this week or next, when you see sell side activity in the tech names that have been carrying this market, and when that happens, money rotates back into the rest of the economy. I just walked through