That was it?

We can just take our ball and go home now?

The A.I. story has come and gone and the recession that they've been telling us about all these years is finally here?

So this is a major top in Nvidia - ending the whole damn thing?

That's your bet?

And this massive top in Microsoft is exactly that - a historic top? One for the record books?

So the largest company on the planet is about to complete this 8 months of institutional distribution and is about to bring down the entire Technology sector?

Keep in mind that Nvidia and Microsoft combine for over 41% of the S&P Technology Index. (Apple is only 5% of Tech now)

Here's what I'm being told is the end for Microsoft...

Is that the bet you're making?

This is the end of the bull market?

Because I see Consumer Discretionary as the leading sector over the past month. Look at those returns, all outperforming the major averages by a long shot:

And another thing.

You know how we've been pointing out that High Beta has severely underperformed Low Volatility?

Well look at this monster whipsaw.

Keep in mind that...

Literally.

The trade today is in a company that actually makes money, minting coins. You know, the coins you drop in the pinball machine.

So, no matter how you think about it, the fundamentalists cannot say that this company does not make money. It always makes money.

Fun and word games aside, we've got a trade that has signaled the next big move and today's trading action is offering us a nice pullback in which to get involved at better prices.

From the Desk of Steve Strazza @Sstrazza

Welcome to The 2 to 100 Club.

In this scan, we look to identify the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there.

We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table, you'll notice we're only focused on Technology and Growth industry groups such as Software, Semiconductors, Online...

In today’s Daily Digest, we’ll review the following:

1. No new positions today.
2. Adjustment to XLI position.
3. No exits since the last report.
4. Current status of open campaigns.
5. NEW: Volatility Snapshot.

Let’s dig in!

From the Desk of Steve Strazza @Sstrazza

Last week, we outlined a short squeeze in Phathom Pharmaceuticals $PHAT, which has been working for us.

It doesn't seem like the market is finished squeezing the short sellers out of their biotechnology positions.

Today, we're discussing yet another biotech stock that has a ridiculously high days-to-cover ratio and short interest.

More importantly, the risk couldn't be more well-defined.

So, we're stepping up to the plate and taking another swing at a short squeeze.

In today’s Daily Digest, we’ll review the following:

1. No new positions today.
2. Adjustment to XLP position.
3. No exits since the last report.
4. Current status of open campaigns.
5. NEW: Volatility Snapshot.

Let’s dig in!

After Covid there was no sector that did better than Consumer Discretionary stocks.

Locking everyone down and sending them all a check to go spend, as it turns out, was great for the Consumer Discretionary sector. 

And then 2021 ended and the correction in Consumer began...

Years in the making, here is the massive top in Consumer Discretionary relative to the S&P500 that's got people talking...

Or is it that the Consumer stocks are just finding support once again where they did a decade ago?

Is the squeeze now ready to get going?

It's interesting that Chip Stocks find themselves in a very similar position.

See:...

Did you hear about the massive top in Semiconductors?

Everyone is talking about it on the internets. So it must be true. 

Seems the easy call here to make is to say "that was it". The Semiconductor story and the bull market as we know it is over...'

One of the things they teach you in the first week of Technical Analysis kindergarten is that infamous Head & Shoulders top.

The reason this is so popular is because it is "easy" to recognize. You have a left "shoulder", followed by a higher high (head), and completed with a lower high, forming the "right shoulder".

Once the "neckline", represented by these gray shaded lines above, gets broken, the whole house of cards collapses.

Or so we're taught.

But here's the thing. 

Asset prices trend. Massive topping formations are much more rare. 

In most cases, particularly during bull markets, these sorts of formations tend to resolve higher, and these "massive tops" are just figments of traders' imaginations.

This could very well be a historic top and selling opportunity in Semiconductors.

It could.

And that's the beauty of Technical...

The market continues to send signals that nearby risks are elevated, and there is no clear indication to us in which direction the next sustained move will come.

So, as has been the vibe for the past couple of weeks, I'm looking for trades that can offer my portfolio some diversification. 

With this in mind, Steve Strazza presented a bearish setup in Block $SQ that checks the boxes for me to add some short exposure to my portfolio to counterbalance the mostly long positions I currently have on the books.

Check out this one-year chart of $SQ:

The stock has been in a downtrend since long before the indexes peaked this summer, cementing its leadership to the downside.

We contend that if the broader stock market is in for further downside action, $SQ will likely be one of the stocks leading the way. As such, we're going to position with options to take advantage of a possible retest of last October's lows.

Here's the Play:

I like buying $SQ December 55 puts for approximately $3.25 per contract. This premium I pay today represents the absolute most I can lose in this trade.

But I'll be looking to exit...

In today’s Daily Digest, we’ll review the following:

1. No new positions today.
2. Adjustment to XLC position.
3. No exits since the last report.
4. Current status of open campaigns.
5. NEW: Volatility Snapshot.

Let’s dig in!