The S&P 500 broke its channel and closed lower. Metals, mining, and energy were the only groups left standing.
Blake Young sees the Chaikin accelerating. Money is distributing out of equities right now.
He’s watching for a drift toward 736 from here.
Every other sector finished negative today. Even basic materials closed below yesterday.
Look closer at that group though. XLB gapped down and closed up, and it has defended the same range since March.
Blake’s thesis starts with the Treasury. If it buys up bonds, inflation hedges get bid and metals prices follow.
He wants gold on a pullback. He is not buying it today.
Copper is the cleaner setup. It held its ground without rallying, which is exactly the kind of tape he wants to sell puts into.
That’s the whole approach right now. Get paid while volatility rises everywhere else.
Here is what he walked through in tonight’s video:
- CF sells the 120 put for $2.90 out one month and pays 2.5%. The stock sits at 125.70, so it has an $8.60 cushion before the trade loses a penny. That’s a 6.8% safety net and 30% annualized.
- Rio Tinto broke through the recent highs and outside the Bollinger Bands. Blake targets 112 for a 10% move, and the stock carries a 4.13% dividend paid semi-annually.
- Freeport cleared its last high close on accelerating volume. The one month put pays 2.3% with a 10.8% margin of safety, and price has to fall $6.22 before assignment.
- Southern Copper closed outside its Bollinger Band right below the previous highs. The 185 put pays 2.58% for the month and the stock has to drop 9.2% before it costs you anything.
Blake is not chasing any of these breakouts. He collects the premium first and takes the discount if assignment comes.
Rio Tinto has no weekly options, so he’d buy the shares outright for the dividend and sell calls against them.
Freeport is the one he’d flip on. A close above the highs tomorrow and he buys the stock or the long calls instead.
