r/wallstreetbets
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u/vegaseller
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15d ago
DD Why SVB is just the beginning, Analysis of the fall of SVB from a Financial Analyst
Ignore the headlines and news anchor, they don't really understand shit. But stuff is just about to kick off and I am going to help explain what is happening and will be happening in the coming weeks and months.
From the start of this fed cycle, I have been wondering who has been eating losses. Basic financial equation 101 teaches you that the present value of an asset is a function of the discount rate applied to its future cf or coupon rate. When the 10/30 year went from 1.5-2.0% in 2019-2021 to 4-5% this year, this meant the market value of those bonds would have fallen by close to 20-25%.
For example TLT, which is the 30 year teasury ETF, has fallen by about 21% in the LTM.
Most people don't understand the bond market in the US is the largest in the world, dwarfing the stock market. It is about twice the size of the stockmarket and is the deepest and most liquid securities market in the world. Within this market, the deepest and most liquid part of the market is made up of US treasuries and mortgage backed agency MBS securities.
With the sudden spike up in rates over the last 12-16 months, the mark to market losses of the bond market is probably somewhere to the tune of 4-6 trillion. And I have always been wondering where that was going to show up and blow something up in the financial market. And the answer is in the banks.
Don't believe what they tell you, Silicon Valley Bank was a very conservative bank. Out of their ~200 billion in assets, very little (<0.5%) was venture debt lending. As you can see in their Q4 Balance Sheet, they had 15 billion in cash/cash like securities, about 120 billion investment securities and 70 billion in loans.
within that 120 billion investment securities, it is almost entirely treasuries and Agency MBS/CMO and CMBS with a touch of muni bonds. You can't build a more conservative book if you tried. As these are all effective government securities as the GSEs are still in conservatorship under the treasury. For years due to Basel III, US banks have been derisking and now most of their balance sheets consists of government or quasi government securites which have almost no default risks.
Now looking at the loan book, you can see the bulk of it is in global fund banking and investor dependent. Global Fund banking is an extremely safe segment, it consists of largely funding or bridging loans to venture capitalist making transactions. So for example if a VC wants to invest in company A, but they want to wait 2 months before drawing down from their LPs, they will go to SVB to get a credit line for this purpose. This is an extremely safe business model as Venture/PE Funding is contracted funding and there has been basically no defaults on these types of loans ever in history. Then you have private bank, which consisted of lending to rich people over collateralized through the value of their houses, which is also a pretty safe business model as their asset coverage typically exceeds 150% of the loan value.
Even the investor dependent segment is typically very safe book, as they will write loans as simply a bridge when a financing round for the company has already closed, but are still waiting a few months for the all the papers to be signed and the funds to be transfered.
So wtf is happening, this is a bank that is holding like 2/3 of its book in government papers and the rest in fairly safe lending. The speculative lending to early tech business represent <0.5% of the book.
The answer is the federal reserve, this guy
He basically fucked over the entire banking sector. Remember that 120 billion in agency backed papers and treasuries in the investment securities section of SVB , well, most of that is HTM (Hold to Maturnity). Its a bank, get over it, a duration mismatch is expected. But the amplitute of the loss is proportional to the raise in rates due simply how bonds work. In the SVB book, the average maturity is around 6 years. Some simple math point to about a 10% loss in this investment book that hasn't been marked to market, representing about 12 billion in losses. This wiped out all the equity of the bank and some of the value of the bonds.
Overall the Agency papers and treasuries can be sold over the course of the next couple of weeks and depositers will get about 60 cents on the dollar and the remainder will be sold over the next 12-48 months and I expect most depositers to get back close to 90 cents + on the dollar.
Well that's great, you might say. NO, IT IS NOT GREAT. BECAUSE SVB was not a bad bank, it was actually a pretty conservative bank. It also wouldn't be insolvent if it wasn't for the fed. What it did suffer from was a unique deposit base that was largely not FDIC insured. Since it was largely catering to start-up companies, most accounts went above the FDIC limit of 250k, as a result, this was simply a bank run similar to during the great depression. It doesn't matter how safe the bank was, if there is a run, you won't survive it. And the uniqueness of start-ups which are most often cash burning and therefore extremely senstivie to the lack of cash just meant they were more flighty depositers. Marry that to the game theory dynamics of the low cost of getting your money out first so you can meet payroll mean't that once it starts, you can't stop it.
Ok, you ask, what the hell does it all mean for the future. Well, here is the thing. If SVB is underwater, are all the banks are underwater?
Here are the assets of JPM, again, for the major banks, JPM has a 3.5 trillion balance sheet, and BOA has a 3 trillion balance sheet. JPM only lists out 641 billion of that 3.5 trillion as trading securities and thus and they reported a loss of ~50 billion or ~8%.
This is a similar picture with BOA, which lists out trading securites of 300 billion, but there is another 2.7 billion in other assets, of which 1 trillion are longer dated treasuries and agency securities. If we mark to market those losses, there is another 80-100 billion in losses which are not being marked to market.
Again, going back to the original thought, someone lost 4-6 trillion through the bond market from fed raising rates. Close to 2 trillion is lost through agency securities with the reminder from treasuries. Unironically, close to 15% of this is lost from the fed itself, due to its own balance sheet of treasuries and agency papers. It looks like around 30% of those agency security losses or about ~600 billion is through the commerical banks. I suspect probably another 300-400 billion though treasuries. So the banking sector has lost about 1 trillion in the past year, of which only maybe 100-200 billion has actually been marked-to-market down as losses.
Remember, the size of the losses in Subprime was only about ~100 billion. Now, every 50 bps increase by the fed results in close to that much in losses to the banking sector. So yes, Mr. Powell wil likely blow up the entire banking system.
Edit 1: Alot of people are pointing out that the deposit base of other banks are signficantly different. Yes 100% agree, but the run on liquidity of a bank can come in two ways. One is on the deposit side (see great depression and SVB), the other way is through the interbank funding market (alas 2008). I will write a part II in the coming days of the drying up of that source of liqudity.
Edit 2: Also a lot of people keep pointing to hedging and managing duration risk. This is BS as all the banks have this unrealized loss on their balance sheet, go look.Imagine God telling everyone he is going to destroy your house, now go and try to find insurance on your house for less than the cost of building a new house. And to the smart asses mentioning swaps. Go ahead and try to swap your house for a new house for anything less 0. Now think termites slowly destroying your house over the course of a year instead an earthquake, good luck being the person trying to hedge that. But the most relevant point is that a security that is classified under the HTM category, it cannot have any hedges. So to all the people who think this was a risk management issue, go look at all the other banks, they have not hedged their HTM securties either. To compound this, the fed in 2021 signaled very strongly to market that rates were going to held at zero until 2024, and then pivoted in 12 months, throwing everyone in for a loop. There was no realistic way for any management or risk management team to have handled this. So yes, the blame lies largely with the fed here.
Edit 3: on all the people saying the larger banks are so much smarter and know what they are doing. SVB had the most liquid portfolio of any bank out there. They had about 8% of their desposits in cash and about ~45% in GSE/treasuries which is the most liquid instrument out there and can be sold down in a weeks notice. None of the other/largest banks are even close to that. The larger banks have a much lower deposit base like ~25%-30% of their capital base and maybe 10-20% in equity and 50-60% are based in interbank financing (hello 2008). The finiky parts of the larger bank's capital structure aren't deposits, most of these are FDIC insured (but still probably only half or so as the business accounts certaintly aren't), it is the intrabank financing part. You know, the stuff that blew up lehman and bear sterns.
Also people don't seem grasp what a bank is and think they should be 100% in cash or something. You do understand banks make money from spreads. Signaling to investors you are taking depositer cash, and investing them in 3-month t-bills yielding 0.25% is a great way to tell them you don't actually have a business model and is a money losing startup like Wework or some shit.
r/wallstreetbets • u/lemenick • 4d ago
DD time to short the absolute fuck out of NVDA - P/E of 120 with stalled revenue and declining earnings growth
Looking at the financials of this company over the past 4 years:
- P/E of 120
- Revenue is slowly growing (8% a year) BUT...
- declining earnings growth (-19% a year)
- Dependent on the Auto industry which has seen a slight decline is sales
- They sell a non-unique commodity that can be easily substituted by other competitors
- They dumped all their money into US Treasuries, corporate debt and mortgage-backed securities which has tanked their porfolio
- Auto buyers are looking at more economical options with a looming recession and economic slowdown, lowering the insurance premiums paid by each customer.
Oh wait, shit, i'm talking about an insurance company, Progressive Corporation (PGR), not a tech company like NVDA which actually has a shot at growing into their P/E potential.
fuck it, I was shorting NVDA as well.
-650 PGR @ 143
-400 NVDA @ 231
r/wallstreetbets
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u/vegaseller
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11d ago
DD Why SVB is just the beginning: Part II Eurodollar edition, from a investment analyst
last week I wrote about why the SVB failure is tied to the fall in bond prices caused by the fed rate hikes, imbuing 4-6 trillion in bond losses globally, around 1 trillion of which fell on the banking sector.
Today, I will be talking about why bank failures are on the way, and it will cause a global deflationary malaise in which central banks cannot quickly respond to.
First things first, the big four US major banks are not going to fail, they are effective government-run utilities at this point. The size of the total Banking sector in the US is close to USD23 trillion. This is relatively safe, it is heavily regulated, most of which is FDIC insured. There may be some runs on the smaller banks, but I don't expect the second stage of the crisis to come from here.
But there is a large banking system outside of the united states, and almost all of it is dealing in dollars. This is the Eurodollar market. 95+% of global trade is done using USD, and so if I am a Korean car manufacturer that needs to borrow dollars to finance the purchase of steel from China, I borrow in dollars from Korean bank, which mayble has a swap agreement with HSBC or a Panamanian bank from my local operating currrency into dollars. The entire system is hidden from view is the size of it is estimated to be anywhere from USD30 to 50 trillion and it finances almost the entire global supply chain.
And the stresses on this system is extreme and is happening on two levels.
First on the domestic US level, The FRA-OSIS spread is at a higher level today than doing the depth of the covid crash in 2020. It is at 70 today. This measures the spread between the U.S. three-month forward rate agreement and the overnight index swap rate. the FRA represents market expectation of future borrowing costs for banks versus the OIS which is the current borrowing cost for banks. And it blowing out to the highest level since Lehman is that market participants anticipate large credit risks coming out of the banking system. When the Fed came out with the backstop of deposit, what is very surprising is that the FRA-OIS spread continued to open up, instead of going back down. It is a sign that banks are starting to be wery of lending to each other.
At the same time, Eurodollar futures spiked at a larger than that after when Lehamn brothers failed. Remember, eurodollar futures are demand for dollars stored "OUTSIDE" of the united states. This shows massive bid for dollar deposits outside of the United States.
So what does this mean? See, the fed could bail out the US banking system, so any further deterioration of the US banking system I think will be limited, although you could still have some regional banks fail and be managed by the FDIC. But the big US banks are getting very very nervous and percieving credit risks and not lending. This will led to high costs for interbank lending. But where the riskiest part of this chain is where it then links up to the Eurodollar market. What happens if overseas bank start defaulting on dollar loans that they have on their balance sheet? Who will come to their rescure?
What happens if those offshore money center banks start facing deposit runs because the loans they gave out in dollars are probably going to see defaults? Afterall, if you do have dollars, why would you put them into a 0% deposit no insurance panamanian bank, especially if there is no FDIC covering those deposits. No, you would want to get it into the US to earn 4-5% in treasuries and money market. So dollars deposited in these offshore banks have been decreasing all year.
This is why you are seeing pressure on Credit Suisse and DB and HSBC, because they are large global money center banks. What happens if these global banks collapse because they cannot attract enough dollar funding? Well, they would bid the hell out of dollar deposits, which is what we are seeing through the eurodollar futures, and once the collapse happens, it would look like the great depression 2.0 as 20-40 trillion of lent-out "Dollars" simply vanish in the blink of an eye.
So the threat of a global deflationary collapse is very much real, and we are staring at its mutation from the US to the Eurodollar market.
r/wallstreetbets • u/joinyellowbrick • Feb 22 '23
DD Nancy Pelosi's $100M Stock Portfolio
We all know Queen Nancy has made a killing in the market (an estimated $50M (almost) since she started filing her trades in 2008)
But all of her gains basically come from AAPL and V, both of which she was buying way back in 2008.
The rest of her current holdings are as follows:
| Ticker | Value | % of Portfolio | Profit |
|---|---|---|---|
| AMZN | $9.6M | 12.4% | -$2.2M |
| MSFT | $7.7M | 10% | $1.9M |
| GOOG | $6.6M | 8.5% | $1.1M |
| CRM | $3.6M | 4.7% | $270k |
| AB | $2M | 2.6% | $71k |
| DIS | $1M | 1.4% | -$900k |
| NFLX | $1M | 1.3% | -$68k |
| AXP | $880k | 1.1% | $400k |
| CMCSA | $800k | 1% | $500k |
| MORN | $650k | 0.8% | $550k |
| CRWD | $565k | 0.7% | -$80k |
| TSLA | $500k | 0.7% | -$400k |
| IBKR | $475k | 0.6% | $300k |
| SQ | $375k | 0.5% | $330k |
| PYPL | $372k | 0.5% | -$1.3M |
| DBX | $217k | 0.3% | -$81k |
| RBLX | $210k | 0.3% | -$988k |
| T | $193k | 0.2% | -$80k |
| WBD | $37k | 0% | -$21k |
| CLNE | $20k | 0% | -$25k |
And her most recent trade was losing a bunch of money on RBLX lol
r/wallstreetbets • u/Phelps1576 • Feb 13 '23
DD AirBnB is going to shit the bed on earnings
AirBnB occupancy levels had fallen MoM for 8 straight months straight by the end of October, with AirBnB's management expecting holiday revenue for 2022 to be below analysts' expectations. This, combined with local governments cracking down more on short-term rentals + rising consumer dissatisfaction with the procedures involved with staying in AirBnBs, makes me think AirBnB's revenue and EPS may fall short of the Street's expectations for them but, more importantly, I think they'll reduce guidance for Q1 2023.
On the flip side, US hotel occupancy rates were at their 4th highest levels for Q4 from the last 23 years during Q422, with occupancy at 54.2%, and with 40 markets, including Atlanta, Boston, and Chicago, saw their highest occupancy ever for the last reporting week of the year. This, combined with the fact that hospitality research firms are expecting strong Q1 and Q2 growth for hotel carriers compared to 2022 due to a lack of Omicron on people's minds + already seeing huge explosion in average daily rates and revenue per available room when compared to pre-pandemic levels, makes me think that MAR and H are great plays for 5% swings within 2 weeks of reporting later this week if you get in on Monday.
Please tell me why I'm stupid in the comments
TL;DR -
$MAR 177.5C MAR32023
$H 120C MAR172023
$ABNB 100P FEB242023
r/wallstreetbets • u/cbusoh66 • 4d ago
DD So how deep is this banking crisis?
So I was watching an interview with a Columbia University professor who was a co-author on a recent research study and in it, they've identified several banks (only name SVB since it already collapsed) that were "insolvent" with mark-to-market losses. Other than SVB, they identified 3 banks with assets over $200 billion and based on Federal Reserve List of U.S. Banks we can deduct who the 3 are and they've been in the news lately, so no surprise.
However, the surprise to me was they identified 1 bank (Bank A in blue dot on Figure 5) with over $1 trillion in assets. There are only 4 banks in the U.S. with over $1 trillion in assets, JPM, BoA, Citibank, and Wells-Fargo. Since JPM and BoA have assets over $3 trillion and $2 trillion respectively, we can assume the $1 trillion figure may point to either Citibank or Wells-Fargo if we go by that Federal Reserve list above.
Here's Figure 5 from the study:
Michael Burry posted this chart few days ago, not sure what the source for it but if you combine the two, you can draw your own conclusions.
All these big banks are probably considered too-big to-fail anyway, but this shows how serious the situation is and why Yellen and Powell (especially in his press conference today) jumped in head-first to try to contain this banking contagion from spreading to one of the big boys.
r/wallstreetbets • u/captainshred2000 • 8d ago
DD First Republic is conservatively worth $83 / share
Really good analysis on First Republic valuation and possible scenarios. See the full article in the link below. There was an extreme amount of fear mongering going on Friday due to uncertainty, which is not based on any fundamental analysis. I believe the conservative value of the company to be $83 / share based on the following:
If FRC were to sell parts of its AFS or HTM securities at a loss. Assuming they require 10 billion of liquidity and incur a loss of 17%, would result in a 1.7 billion loss:
Tangible Book Value = (212,639–195,193–218–1700)/187 = $83
Assume a tangible P/B Ratio of 1
Fair value = $83
See the full write up here:
$FRC
r/wallstreetbets
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u/loose-ventures
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Feb 23 '23
DD $WBD - Harry Potter is going to make $billions this year...and you can too!
Hogwarts Legacy is the latest blockbuster videogame released by WBD and is breaking numerous videogame sales records within the first few weeks of release.
You nerds are going to make WBD execs a lot of money
Overview
Hogwarts Legacy's physical sales have already outpaced Elden Ring by 80% while digital sales are outpacing by 56% as of this morning (source 1, source 2). Assuming a blended 65% increase over Elden Ring's sales at an assumed $65/unit sold (many special editions have been purchased), the game has generated a rough estimate of approximately $1.3B in the first two weeks of release.
There are no known major issues with the game (some bugs present on Steam but no more than typical) and once it is clear the game is a hit among fans and the development is solid, the sales momentum should continue. Additionally, this momentum will likely see some benefit from the release of Hogwarts Legacy on PS4, Xbox One, and Nintendo Switch at later dates:
Overall, Hogwarts Legacy will probably generate at least $2B in revenue for WBD within the first year of its release. The massive success of this game will open the door for more opportunities to expand on the Harry Potter franchise potentially including DLC for the game and possibly, a new movie.
FY23 Estimates
source: https://app.tikr.com/ (you need to sign up but it's free)
WBD is currently trading at a discounted 0.75x P/BV with a forward FCF Yield of 5.7%. Estimated sales for WBD is $44.2B for 2023 (2% growth YoY, median of analyst estimates from Bloomberg, sourced from https://app.tikr.com/) which surely includes Hogwarts Legacy sales but this estimate is probably a bit conservative based on very strong sales figures so far.
If WBD guides for an extra $500MM to $1B in sales for the year based on initial sales, this would imply a 3-4% increase in total sales (vs 2% estimate) which for a stagnant company like WBD, is a fairly big deal. Profit margins for new big name VGs can approach 50% or higher so with at least $2B in sales, at least a $1B increase in FCF seems realistic and would bring WBD's FCF Yield up to a favorable 7%.
TL;DR - Focus on FY23 guidance, not past results!
- Hogwarts Legacy will generate at least $2B in sales in its first year
- WBD will likely increase revenue and earnings guidance for the year based on Hogwarts Legacy's strong sales so far
- Mgmt will want to further leverage the Harry Potter franchise given the massive success of the videogame with potential for DLC, another movie, or even a tv series (a la Disney)
- Markets are not yet pricing in the sizable revenue and FCF increase Hogwarts Legacy will contribute with WBD trading at a discounted 0.75x P/BV
My Position:
WBD has earnings AH today and I'm in the 17C expiring tomorrow, June, selling 14P exp March, and am holding shares. In case you don't know what to do, here's a chart giving you terrible instructions:
| Investor Type | Trade |
|---|---|
| Boomer | Buy shares or 20C LEAPs, wait at least a few quarters for increased sales to be baked into stock price |
| Thetagang | Sell OTM or ATM Mar puts based on risk tolerance, get assigned at a lower price or make 50-80% annualized return |
| Degenerate | Weeklies baby, might I suggest the delectable 17C or 20C. Could also be less degen and buy June |
r/wallstreetbets • u/FootieBoisElite • 2d ago
DD Backstopping deposits doesn't mean the banks won't fail - here's who's next
Huntington National Bank, puts all the way down the chain 30 DTE.
Why? When comparing them to signature bank, they have had a similar influx in deposits since the pandemic and even greater losses on their AFS positions.
Yes, there are plenty of other regional banks that could fit this bill and have similar trends, but $HBAN has had the highest losses on their AFS positions. So if there is any sort of triggering event over the next 30 days where deposits start to decline and they are forced to sell their AFS portfolio, it would have a more significant impact on their capital then other banks (since banks can exclude losses that are sitting in OCI from their capital calculations).
r/wallstreetbets • u/DaddyDersch • 9d ago
DD 378 or 405.. what comes next? 3-17-23 SPY/ ES Futures, VIX, DXY and 10YR Yield Weekly Market Recap and Analysis
Well as per usually we DID get a red open on quad witching day and we also closed lower than opening price. However, this was an extremely choppy and miserable day to trade.
As you can see the bank situation is far from over… last weekend we actually went into this with the same exact issue… and we were saved over the weekend and that was the 2% futures rally.. However, going into it again this weekend can the fed and the big banks save us once more? Stay tuned to find out…
As you can see next week is FOMC and as of now there is a 38.7% chance of a fed pause and a 61.3% chance of a 25bps hike… for me I don’t think that matters… I think we are pretty much guaranteed a 25bps hike… but what is more important than that? The dot plot… that dot plot is not going to look good at all..
With all these extra money (yes I know this isn’t QE and its not the same as jpow money printer…) but there is still almost $2 trillion extra dollars being injected into the economy right now… that is NOT going to help the fight for inflation at all.. I think JPOW is going to come off very hawkish and I would be very surprised to see him let up.
Jpow has officially found himself in the worst case scenario… he is facing a legitimate financial collapse and facing runaway inflation. He has found himself in a no win situation… something will break. And its coming quick and fast.
SPY DAILY SUPPLY AND DEMAND
From a daily supply and demand standpoint we are stuck between two big levels… we have our downside demand (support) at 385.87 and our upside supply (resistance) still at 405.17… the way im seeing this play out and that huge rejection off the daily 20ema yesterday with todays red inside day is that we actually are setting up for a new supply to be established at 396 on Monday. That would then open up a retest of 385.87 demand (support).
From there we either reconfirm 385.87 as demand (support) which I find unlikely… or what I see as a higher probability is that we break through that demand and attempt to establish a new lower demand (support) somewhere between 376.67 and 385.87.
SPY WEEKLY SUPPLY AND DEMAND
From a weekly supply and demand stand point we actually have not quite come into any new levels. The biggest thing to note though is that this week we came down and nearly perfectly bounced off demand (support) at 382.21 that was established back in December.
Until a new supply or demand is established the weekly does not provide enough details for a trade. However, it is clear that this double demand (support) area from 382.2 to 385.9 is extremely strong and we will need to see a pretty sizeable drop and more importantly closure below that in order to see further downside. The weekly as long as we hold 382.21 I actually do favor slight upside.
SPY DAILY PRICE ACTION
from a daily price action stand point I actually am very bearish. The way I am seeing this right now is that this was a failed breakout (yesterday) and that this is a pretty massive bear flag forming. This bear flag has a target of 378.
We have established a really large breakout/ down triangle which provides support at 388 and resistance at 393.7 on Monday. If one of these levels breaks that will be our first sign of where we are headed next.
We did actually end up closing at 389.99 which puts us back under key pivot point of 390.1. This failed breakout/ recovery and closure back under that level is very bearish to me and once again sets up a run to this green channel support down at 378. The biggest thing to see here too is this is the 2nd day with a 20ema rejection and we lost the daily 8ema support again. I see far more weakness than I do strength here on SPY.
SPY WEEKLY PRICE ACTION
Now the weekly much like supply and demand weekly doesn’t really provide us much details. The biggest detail I see here on the weekly is the fact that we attempted to recover the weekly 8/20ema and were immediately rejected.
This rejection is very bearish and to me sets up a lower downside. Now I also note here though that we did close under 390.1 for the 2nd week in a row. This to me with 390.1 as my key weekly pivot point (and really the key yearly pivot point) find myself looking for 375-382 before looking for a retest of 396.5.
Now the hardest thing is that we have FOMC next week which is very likely to provide turbulence and provide unpredictability but I remain bearish going into next week and I remain much like I said back 2 weeks ago bearish on FOMC and the weeks to follow.
SPY Weekly Levels:
Supply- 412.53
Demand- 385.9 -> 382.21 -> 357.3
Weekly Support- 382.4 -> 375.8
Weekly Resistance- 390.1 -> 396.5
FUTURES DAILY SUPPLY AND DEMAND
Just as I suspected last night we are getting a 3995 supply (resistance) established on futures. That is very bearish and tells me we are right on track for a push back to 3895 support. This current supply (resistance) and demand (support) from 3995 to 3895 has actually set up a really impressive 100 point range which we have been trading within for about 8 days now.
With this new 3995 supply (resistance) my downside target remains 3895. IF we were to lose 3895 we should look for 3833. I actually was targeting that on Wednesday but we did not quite have the strength to get there.
The most probable daily case is that we will establish a new demand somewhere between 3833 and 3895. This would be the bounce play and that would be when I look to go long (or at least close my short). However, I still believe there is further downside to go.
FUTURES WEEKLY SUPPLY AND DEMAND
From a weekly supply and demand aspect we established that 4055 supply (resistance) the last week of February. From there we bounced off 3866 demand (support) that was established back in December.
As of right now until a new demand (support) is established we should be looking for further downside. However, I would also play slight caution here that this 3866 level has been extremely strong and we should worry about a bigger bounce off that level. On the other hand the more that this demand is beaten on the bigger chance that we drop through it.
FUTURES DAILY PRICE ACTION
The futures and spy daily patterns here tell me a lot of the same picture. However, as I was suspecting we actually came into a beautiful double top right off 3995. That 3995/4000 level has been a major pivot level for over a month now. With that rejection off the 200ema also and closing back under the daily 8ema and more importantly back under 3955 support (remember this was resistance for the last 4 trading days before we broke through it yesterday).
Futures is set up perfectly for a retest of 3920 support. This is the major pivot level for futures. If they lose that level then we are heading back to that December consolidation support area which sits near 3800 to 3890.
Now the breakout triangle here for the bear flag on futures actually shows a support at 3905 and resistance at 4005 for Monday.
FUTURES WEEKLY PRICE ACTION
Now futures weekly here actually closed out a massive doji candle here as opposed to that more hammer candle on SPY weekly.
The biggest thing I note here is that we actually are perfectly rejecting the JPM collar calls at 4030. Why does that matter? Well the collar roll is officially in two weeks. Historically speaking over the last year I would say we are more likely to be at the collar puts (currently 3600) then we are to be at the calls… Now there was December collar roll where we were closer to the calls but that is not always the case.
My downside target here remains 3770 to 3850. Futures weekly also hard rejected the weekly 8, 20, 50 and 100ema this week.
Futures weekly levels:
Supply- 4055
Demand- 3971 -> 3866 -> 3600
Weekly support- 3920 -> 3860 -> 3770
Weekly Resistance- 3975 -> 4020 -> 4075
VIX
Now its actually the ugliest bull flag I have ever seen but there could very well be an opposing bull flag to the SPY bear flag. IF that is the case we are in for a massive push up on the VIX. I think the most important thing to note today about this VIX candle is the fact that it did not see the normal massive move up followed by a massive move down.
This VIX candle shows me that hedges went on (since we opened at 22.92) early in the day and they never came back off the books. This market officially is positioning itself bearishly. I mentioned the daily 20ema support at 22 was the bounce spot and we actually did end up bouncing off 22.58 just over the daily 20ema.
Upside target is once again the 28-29 range next week.
DXY
I had mentioned this DXY daily breakout triangle and we are still in it. The dollar didn’t quite dump to that 103.6 level of support but is now rejecting the daily 8ema and clearly trending down.
I still am learning the dollar and honestly with stocks down and the dollar down I still am trying to find the correlation and how to benefit. My thoughts are obviously the dollar is losing value with the financial system issues and potential pause/ rate hikes next week. However, I would love some feed back on others thoughts on the dollar.
10YR YIELD
Of the VIX, DXY and 10YR Yield I actually find the 10yr to be most telling. If you take a look at the 10yr you can see that we are in a clear trend for the last 5 days now… huge drop in rates (because people are jumping to safety of the rates) followed by a huge rise in rates (markets going back to risk on) only to drop the next day.
The thing I find most interesting today and the VIX did the same thing is that for the most part the 10YR did not recoil. TO me this shows that people found safety in bonds and this time they chose not to leave that safety. I think this is extremely telling of the future and whats to come. Market (or at lest big money) realizes how dire this banking situation is and I believe they are very much so positioning themselves for the worse right now.
The most interesting thing is that we can not seem to break the 10yr lower than 3.395%. That has been a huge “support” since January 20th.
WEEKLY TRADING LOG
Today I actually found myself this morning in quite a bit of drawdown. I took some heavy losses turning in 4 losses (almost all full stop loss) out of my first 7 trades. I decided to take a little mental break and go for a walk. I came back and was able to put in 7 back to back wins in order to close out a green day.
Overall profit wise not a bad week. I was very happy with my Monday, Tuesday and Wednesday trading. However, the last two days I found myself being chopped up by everything. I just seemed to either 100% get stop loss hunted or hard bite the fake out.
I found price action just to be very erratic and hard to trade. I also found that price action (and premiums) at times move so fast that I was left in the dust as premiums dumped 10-20 cents at a time. The other issue that happened a few times today is an extreme lack of pay out on premiums. I had two times in calls and one time in puts that for the DTE I use (which is my standard) I found that a move that was an easy 5-10% layup barely hit 1% profits. I watched a call and a put (at different times of course) move in my direction and lose value the whole time.
Tough finish to the week. But ready to take on next week!
r/wallstreetbets
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u/star-player
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Feb 06 '23
DD Chat GPT will ANNIHILATE Chegg. The company is done for. SHORT
Alright apes, strap in your seat belts for some logical enough DD.
I like AI/ML, a lot. This shit’s gonna change the world - especially Large Language Models like Chat GPT. It’s like the invention of the search engine on steroids. Chat GPT Passes Medical License Exam, Bar Exam. It will write papers, code, problem solve, strategize for you - you name it. 1 programmer who knows LLMs is worth 4 programmers who don't; learn to use them, or get left in the dust.
But the most obvious, pressing issue is with “get some poor asian kid on the other side of the world to do your homework for you” Chegg. This company has not sufficiently prepared for the reckoning.
I've used Chat GPT for my own Computer Organization & Architecture HW and Computer Science HW (as a learning tool *wink*). It's an amazing, versatile tool if you put sufficient details in the prompt, whiiiiiich is why it’s superior to Chegg.
It can solve problems that haven't even been added to their database yet - like concerning new assignments or material from new professors. You can also ask it to elaborate and explain certain problem-solving steps, which Chegg cannot provide if there's only one solution uploaded - you've got as much as the poor asian kid decided to write down 💀
College students are the most significant demographic of Chegg, and the competition of free vs. $15/mo for generally low cash flow customers is a no brainer. If you’re concerned about the plan for premium Chat GPT, according to CEO Sam Altman “users will still be able to access the chatbot for free” post release.
While Chat GPT doesn't have verification of veracity (truthfulness) nor precise equation manipulation yet, we can expect it and competing AIs to pursue such features moving forward. If equation solver-extraordinaire Wolfram Alpha has been publicly available for the ballpark of a decade, it does not seem like a stretch that this technology will be difficult to implement. Google’s equivalent “Apprentice Bard” is also coming “very soon” according to CEO Sundar Pichai.
Ok so it seemed too good to be true,
so I investigated to see if Chegg was working on integrating AI - since that would be a potential safeguard to retain clients they’ve lost since the pandemic (their peak when everyone was cheating at online school) has dwindled.
Lol.
The normies haven’t even really figured it out yet
They started to realize there might be a problem Jan 18th
And while the CEO swooped in 2 days later to stop the bleeding, he made no substantial defense against the looming threat of Chat GPT and other LLMs coming soon.
Their last big AI news, as far as I've been able to tell, was the acquisition of WriteLab (basically a grammarly type fixer) in May 2018! Present day, they're either internally freaking out or execs are oblivious that their product is about to be made obsolete.
Only 5 days ago are milquetoast, boring investors starting to turn on Chegg. They have no idea of the Chat GPT storm coming.
CHGG is past expiration date, don’t get stuck holding the moldy bag. Puts 2/17 $20
Join the wave - surfs up 🏄🏄🏄
- star-player
r/wallstreetbets
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u/MrSamsonite
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7d ago
DD Bearish Decoupling: What we missed about the Bank Failures
This is going to sound, well, regarded.
But I believe this to be completely true, and I think I can convince you of the same:
Peter Thiel's Founders Fund venture capital firm intentionally collapsed Silicon Valley Bank in order to create a global panic
We'll dig deeper into Peter Thiel later on, but for now just know that he's a notorious tech billionaire who runs a venture capital (VC) firm called Founders Fund.
I. The Bank Run
On March 10, Silicon Valley Bank (SVB) collapsed, becoming the second largest bank failure in US History.
The timeline of the collapse was as follows:
- Two days prior, SVB reported some troubling financials: They were at risk of being downgraded and had an emergency stock sale to avoid it.
- Several large tech VCs urged their portfolio companies to withdraw their deposits from SVB
- The word spread through the industry and smaller VCs followed suit
- This created a run on the bank: Depositors rushed to withdraw their money and SVB went under.
Although the bank would have been in serious long-term financial trouble regardless, it would have lived to see another day if the bank run didn't occur: No bank run, no collapse. Unless multiple VCs had come to their own independent decision to tell customers to withdraw at virtually the same exact time, this means that only one VC caused the bank run. If that one VC doesn't get spooked and alert their investors, then there is no reason for any other VCs to panic and tell their own investors to withdraw.
So which VC was the first to report it? This is difficult to pinpoint exactly, but Peter Thiel's Founders Fund Is the only one I've found cited:
- "News of… Peter Thiel's Founders Firm [sic] advising clients to withdraw their deposits from Silicon Valley Bank has hit the main street press" (3/10 - during the bank run)
- "[Thiel's] efforts are thought to be the first that eventually sparked the bank run" (3/13)
- "After [Founders Fund] advised clients to move their money out of SVB early Thursday morning, panic ensued" (3/16)
It is clear that Thiel had the means and opportunity to cause the bank run, but that certainly doesn't mean he did it intentionally. Wouldn't the most likely explanation be that they alerted their investors but hadn't considered that it could lead to a bank run? How could Thiel possibly have a motive to do something as ludicrous as collapsing a bank, especially since he had $50 million in SVB? It's a long walk but we'll get there.
II. Thiel's Big Bet
Peter Thiel rose to tech stardom during the dot-com bubble as a founder and CEO of PayPal, which became one of the first and most successful ways to make payments online using a digital wallet. In 2005, he created Founders Fund, a generalist VC firm that has had investments in companies as diverse as SpaceX, Airbnb, Facebook, Spotify and Oscar Health.
Thiel has made countless investments, but the majority of Thiel's $8 billion estimated net worth can be traced to one specific asset. Starting in mid-2017, Founders Fund bought around $20 million worth of Bitcoin. Immediately afterward, Bitcoin began its first massive surge, jumping from $50 to $315 in less than six months.
While Founders Fund has given very few specifics about their Bitcoin holdings since then, Peter Thiel's net worth over time shows a strikingly similar pattern to the price of Bitcoin.
If his portfolio were diversified across Founders Fund's holdings, we would expect virtually no correlation between the shapes of the two lines. Instead, we see almost identical trends since 2021. This chart makes clear that the lion's share of Thiel's net worth is in Bitcoin, making him one of the wealthiest crypto billionaires on the planet.
But before we go further, we're going to need a crash course.
III. A Beginner's Guide to Ponzi Schemes
Ponzi schemes are often very elaborate in order to keep the scheme hidden, but the fundamentals are extremely simple: The scam operator gets people to invest in something by promising very high returns, but the investment doesn't actually exist. Instead, the scammer pays off people's returns with money they got from other investors. So if two people invest $100 in a Ponzi scheme and then the "investment" goes up 50% and one of them withdraws, the scammer will pay out the $150 from the $200 collected.
Because Ponzi schemes make no real investments, they could never pay back all of the returns to all of the investors. Because of this, Ponzi schemes require a constant flow of new money to stay AFLOAT. If our example scammer never finds a third investor and the remaining investor tries to withdraw their $150, the scammer can't pay it and the Ponzi scheme would be revealed as a sham.
This causes the collapse of the scheme to become more devastating for victims the longer it goes on: Victims see the high returns they're apparently getting on their investment so they often leave their money in and continually add to it. When the scheme collapses, all of the money that the victim thought they had invested is revealed to be non-existent: They've been getting statements showing their investment increasing, but their money disappeared a long time ago.
Although Ponzi schemes can look massively different than one another, there are several common characteristics such as the following:
High investment returns with little to no risk
- High returns incentivize victims to keep investing instead of withdrawing their money, which could lead to the scheme's collapse. It also makes the victims less likely to inspect things too closely because they believe they are getting incredible returns.
Unregistered investments
- Because the investments are fraudulent, scammers avoid registering the investments with regulators like the SEC, which keeps governments and the public from seeing the details of the operation. This can often involve hiding assets.
Hype the investment and promise incredible returns
- These attract new victims into the Ponzi scheme, get existing victims to keep investing more of their money, and drown out skeptical voices.
Complex and mysterious investments
- By building complex webs around the supposed investments, scammers position themselves as the knowing experts, they make everything too arcane for the victim to understand, and they justify the astronomical returns.
IV. A Non-Exhaustive List of Known Cryptocurrency Ponzi Schemes
While Ponzi schemes can exist in any industry, they have been especially common in the cryptocurrency industry. Note the common characteristics of Ponzi schemes throughout.
- 2011-2012: Bitcoin Savings & Trust offered a bitcoin arbitrage investment with guaranteed returns of 3,641% per year, stealing $4.5 million from victims.
- 2014-2017: OneCoin sells a coin with entirely fake crypto mining and blockchain commitment. 96 people arrested. $4 billion stolen.
- 2016-2018: AriseBank claims itself the world's first decentralized banking platform. They sell unregistered securities and lie to victims that their money is FDIC insured, ultimately stealing $4 million from investors.
- 2017: Centratech promises to launch the "Centra Card", which could be used to pay with cryptocurrency anywhere Visa or Mastercard are accepted, though they never partnered with either company. They created a fictitious Harvard alumnus CEO to give the scam more credibility.
- 2017-2019: Celsius "lent the same assets over and over and over again to juice yields", as industry custodian bank Prime Trust noted. They suffered a liquidity crisis and suddenly closed the operation. $4.7 billion stolen.
- 2018: Bitconnect offers a complex new investment that involves lending their coin in return for interest payouts determined by a trading bot at an astronomical 377% per year. Bitconnect suddenly shuts down and the coin price plummets 92%. It is a near total loss of value for the victims.
- 2018-2019: PlusToken offers 9% to 18% monthly returns, hyping the scam at conferences and meetups. 96 people arrested. Over $2 billion stolen.
- 2018-2022: Terra) stablecoin is allegedly pegged to the U.S. dollar based on and promises 20% returns for investors. The peg is not backed by cash or collateral, but by a smart algorithm that they guaranteed would maintain the peg. Terra suddenly loses its peg, wiping out $45 billion of market capitalization in a week.
- 2019-2021: FTX provides a cryptocurrency exchange for people to invest in coins, but secretly funnels the cash out of the exchange and replaces it with their worthless sham coin, stealing $10 billion from victims.
V. How Peter Thiel sells Bitcoin
Even though there are clearly outsized numbers of Ponzi schemes within the cryptocurrency industry, it doesn't mean Peter Thiel is running a Ponzi scheme as well. But does Thiel's operation share any of these common characteristics?
Let's have a look at his Bitcoin 2022 Conference keynote speech and see if it sounds like any of the aforementioned cryptocurrency scams:
He asserts that Bitcoin is a store of value and a gold replacement because it is an impenetrably safe asset for investors during turbulent times, echoing an argument he's been making since at least 2018. "Bitcoin: Store of value. Gold replacement."
Although Bitcoin was roughly $45,000 per coin at the time, Thiel says it is severely undervalued. Since gold has a market cap of $12 trillion, and since Bitcoin is replacing gold like he told us, we can expect Bitcoin to explode up to a $10 trillion market cap, which would be about roughly a 10x increase in the price of Bitcoin.
But then he pivots: "But the real competitor for Bitcoin…is not even gold. It's something like the S&P 500; it's the stock market as a whole." He explains that the gold market and the stock market were the same size in 1980, but now the stock market is 10 times the size of gold. And, he asks, since the stock market is the benchmark for Bitcoin, "Why can't there be parity between Bitcoin and equities? Why wouldn't we be talking about something more like a hundred-to-one [increase in Bitcoin price]?" The audience goes wild with excitement.
He then shows a chart that shows Bitcoin's 2021 surge overlaid on a map of the rate of inflation, which started rising a few months after Bitcoin did:
This could just be a coincidence, and he doesn't bother addressing the clear divergence between the two starting in late 2021. Instead, he asserts that this is because "Bitcoin is always the most honest market in the world. It's the most efficient market, and it was the canary in the coal mine…it was telling us the inflation was coming….It is telling us that the central banks are bankrupt, that we are at the end of the fiat regime."
In his conclusion, he explains that in our corrupt world of traditional finance, Bitcoin's biggest asset is the mysterious veil that surrounds it, since it protects against enemy number one: The Federal banking system. "Bitcoin is not a company. We do not have a board. We do not know who Satoshi [the mysterious creator of Bitcoin] is."
Is Bitcoin a Ponzi scheme? I don't know. Does Bitcoin sound nearly identical to several known Ponzi schemes? It certainly does. Absolutely.
VI. The Bearish Decoupling
Although Bitcoin had an unprecedented years-long surge since Thiel invested in 2017, it reached its last peak in October, 2021. Since then, the price of Bitcoin has plummeted over 70%.
In 2021, Thiel backed the cryptocurrency exchange Bitpanda, which tripled its valuation to $4.1 billion in just five months after the deal. A year later, Bitpanda laid off a third of their workforce as Bitcoin plummeted.
Remember how Ponzi schemes always require more and more cash inflows or else the bottom will fall out? If Thiel is running a Ponzi scheme, then this would be catastrophic. It would only be a matter of time until the bottom falls out unless Thiel could start getting a whole lot of cash flowing in again.
7. What about those other Bank Failures?
Silicon Valley Bank wasn't the only bank failure in March 2023. Two days prior, Silvergate Capital liquidated; two days after SVB, Signature Bank went under. Although the narrative has been around a failure of regional banking**, Silvergate and Signature were** the two largest providers of banking services to the cryptocurrency industry.
Last December, in the wake of the FTX collapse, Senators Elizabeth Warren and Tina Smith wrote a letter to Federal Reserve Chair Jerome Powell. The FTX collapse surfaced alarming exposure to cryptocurrency in the U.S. banking system (insolvent husks in bold):
"Moonstone and Deltec are just two of several banks to have their crypto ties come under scrutiny in the FTX fallout, including Silvergate Capital Corp., Provident Bancorp Inc., Metropolitan Commercial Bank, Signature Bank, Customers Bancorp Inc., and others." They go on to say, "In the case of Silvergate, crypto deposits accounted for 90% of the bank's overall deposit base."
Silvergate and Signature were so critical to the cryptocurrency industry because they had offered 24/7 transfers between cryptocurrency and fiat money (US Dollars and so on). These services played a crucial role in keeping Ponzi schemes alive, as we know from our crash course above: First, it supports the illusion that fraudulent coins are just as valuable as real money by allowing the seamless transfer from one to the other. Second, these services allowed for a massive increase in cash flows, which the scheme needs in order to survive.
VIII. Today in Bitcoin
Although the industry has been in shambles for a year and a half and the two largest cryptocurrency banks just imploded, the sentiment around cryptocurrency is more positive than it has been in a very long time.
"Bitcoin thrives in chaos", says Bloomberg. "Turmoil in the banking sector, hotter-than expected inflation data, and renewed hopes for a dovish Federal Reserve has Bitcoin reaching levels not seen in about nine months."
While some have tried to put the blame on cryptocurrency for these bank failures, former Congressman and Signature Bank board member Barney Frank has a different theory: The collapse of these banks was caused by too much unnecessary panic around cryptocurrency.
Forbes, which cryptocurrency giant Binance owns 20% of, ran the following headline: "Bitcoin at $1 Million In 90 Days And Dollar Destroyed -- Huge Crypto Price Prediction Bet Fueled By Bank Crisis and Hyperinflation.", which has an uncanny resemblance to what Peter Thiel shared in his Bitcoin 2022 keynote speech.
Or as Thiel said in 2018: "I would be long bitcoin, and neutral to skeptical of just about everything else… It's like bars of gold in a vault that never move, and it's a sort of hedge against the whole world falling apart".
IX. Putting it all Together
Based on the preponderance of evidence above, I believe the following to be true:
Peter Thiel (and likely countless associates) intentionally caused a run on Silicon Valley Bank by telling his fund's investors to pull out. He did this because his bitcoin empire is a sham, and the tangled web of Ponzi schemes at the heart of the cryptocurrency industry was collapsing after new investors dried up.
The SVB collapse would distract the public from the obvious failures in the crypto industry, would jeopardize the traditional banking system, and would sow fear and panic across the planet as people start withdrawing their money from the banks.
Meanwhile, he and his army of shills continue promoting the narrative that these bank failures were caused by regional banking issues and not by the collapse of history's largest Ponzi scheme. They stir up panic and distrust in the traditional banking system and then sell bitcoin as the only safe alternative.
As of this writing, bitcoin is up 45% in the 9 days since the collapse of Silicon Valley Bank.
Bonus Content: Word Cloud of the "March 2023 United States bank failures" Wikipedia page
TL;DR: As many BITO puts as you can buy, but only if you have the funds to exercise them.
r/wallstreetbets • u/FreshJury • 22d ago
DD VIX Gang, Stand Back and Stand...BUY!
TLDR; YOU CANNOT LOSE MONEY BUYING UVXY*
Bears, if you would like a nice little rub and tug, look no further. This post will explain why buying shares of leveraged volatility products cannot and will not go tits up.
I am down 37 bands since I last posted here 8 months ago. I haven't given up my thesis or my dollar cost averaging and I won’t until capitulation occurs, be it next year or next week. As I see it, the longer this equities bubble persists, the more time I have to build up my already quite large position. In this post I would like to discuss my perspective on: Why the VIX is asleep, Hypothetical price targets for UVXY, and How my strategy has changed.
Disclaimer: The 2x volatility index that I trade is below the $500mm market cap (or AUM in this case) allowed by WSB, so I will be focusing on UVXY for this post. Check my positions at the end of this post to see exactly what I am doing.
Another Disclaimer: I’m quite regarded. While my DD should be solid from a factual standpoint, only imitate my positions if you don’t mind the possibility of having a few extra inches added to the circumference of your anus.
Without Further ado.
Why the VIX is Asleep
As many of you may know, the VIX index is calculated using a very complex equation, but essentially is tracking the spread of options premiums on the SPX. In uncertain times or market downturns, as traders scramble for downside protection, these spreads can get sporadic and the VIX will spike.
So what gives? Why hasn’t there been a meaningful increase in the VIX index since the market has fallen ~20% last year? I mean, the VIX spiked over 150% with the Fed rate hikes in 2018 while the market dropped ~18% from September to December. Well the answer has to do with a worrying trend that has started getting out of hand in the past three quarters: institutional investors and hedge funds trading 0DTE options on the SPX. These types of trades create ample liquidity in the options market, rocketing the indices to new highs (remember when QQQ closed +7.35% on 11-10-22 ?) and suppressing the VIX index. This can lead to a vicious cycle with lower lows in the VIX begetting higher highs in the SPX, encouraging further 0DTE gambling. But every cycle must come to an end…
0DTE SPX volume at an all time high, while the VIX and VVIX make sharpest declines since Volmageddon
These types of trades generate large profits for the institutions who are able to sell far OTM options without posting collateral. However, as we all know, trading 0DTE comes with its risks. When the narrative regarding the economy changes (consumer debt is at all time highs, while household savings is nearing all time lows btw), or a large player in the 0DTE market leaves for whatever reason (drying up liquidity) hell will break loose. When the price stability in the options market goes haywire, VIX will spike. On top of this, scrambling for 0TE puts to hedge will drill the SPX as MMs need to sell SPX short to gamma hedge.
To conclude this section, trading 0DTE works very well… until it doesn’t. Now onto the fun part: price targets.
Price Targets
First things first, this volatility spike will not be like Dec 2018. How can I be so sure? Well, because if it was, we would have seen it happen already. In early October 2018, the market reacted swiftly to Fed policy, with the VIX following closely behind.
VIX reacts to market declines immediately in 2018
Compare this to what we see now. A sell off, comparable in percent decline, without the fireworks on the VIX:
VIX stays calm despite 20% drawdown
Okay, so VIX is dead, so what? Well I’d like to convince you that this is a premonition of something far more violent than the VIX spike in late 2018. I believe that this first 20% leg down was orderly selling by institutions, all of which are preparing for a monstrous capitulation in the coming year. I’d like to remind you that despite the fact that we are off of the all time highs of Jan 2022, we are still in a massive equities bubble that is only exacerbated by earnings contraction and the weakening consumer. Given that we are at the end of a 12 year secular bull run, I think it’s appropriate that we look at the behavior of the VIX in prior recessions.
2001
March 2000 to June 2001-- SPY: -22.7%, VIX: +40%
June 2001 to September 2002-- SPY: -38.1%, VIX: +113%
VIX trades sideways until second leg sell-off
2008
October 2007 to August 2008-- SPY: -16.7%, VIX: +3.3%
August 2008 to October 2008-- SPY: -24.8%, VIX: +419%
VIX snoozes until MASSIVE spike during OCT '08 capitulation
It is apparent that when a big recession is brewing, the VIX will remain relatively tame during the first leg down, before exploding during the final capitulation. So what are my price targets for the coming capitulation?
Price Targets
I am going to use the historical prices of UVXY during the COVID crash to extrapolate what we may be able to expect from a leveraged volatility ETF during a full blown panic. I am aware that the COVID crash was a rather unique scenario, with the first pandemic in a century adding extra fear and volatility to the sell off on the way down. I am not here to argue about the exact price that VIX will reach, but given the recent 0DTE gambling, declining housing market, impending wars, persistent inflation, etc. I think it is reasonably realistic to use COVID crash as a model example (especially considering how much larger the bubble has gotten since 2020).
UVXY hit an intraday low of 105.5 on February 19, 2020. After a wild month of trading, UVXY topped out at 1350 on March 18, 2020. This astounding 1180% price increase is a testament to how extreme leveraged volatility ETFs can behave in uncertain times. But wait, UVXY is only a 1.5x leveraged VIX futures product. What if we wanted more leverage? Hypothetically, the 2x leveraged ETF that I own (that I shall not name) would return a staggering 1606%. This is like going from 16.18 (it’s closing price on Friday 3/3) to 276.06. Remember, this is just based on the COVID crash. Whether or not this next spike will come up short or surpass this return, no one can know. What I do know, is that your returns will likely be so significant that you cannot lose money buying shares of these products.
WHY YOU CANNOT LOSE MONEY BUYING UVXY
UVXY decays, we know. We also know that the return needed to break even on a losing trade becomes more and more daunting as your percent loss increases. For the sake of this DD or (perhaps more accurately) hardcore bear porn, please indulge with me. Imagine that on Monday a crash similar to COVID crash begins, it won’t, but just imagine. What does this mean? It means that over the next month, UVXY will go from 4.57 to 58.48, an 1180% return. Wow! If you bought on Friday at close, that's a great return! But let’s be real, that would never happen. We all know that timing the market is extraordinarily difficult. This is the number one reason I quit options. Suppose you still wanted to capture some of the return from that incredible spike in UVXY. Well, what if you dollar cost averaged? I can already hear the replies, “DCA in UVXY?!?!?! What a regard” and on and on. Well I think this strategy may have more merit than you give it credit for. Why? Two reasons: dollar cost averaging allows you to build up a massive position in UVXY (or another volatility product) while not having to time the crash. Sounds like a win-win.
Now, consider the chart I posted above. Consider that in order to break even on this hypothetical UVXY spike you would have had to buy UVXY and then sustain a 92% loss.
12.80x = 1
x= 0.078
1-x = 0.92 = 92%
Do you understand what this means?? It means that to lose money on this trade you would have to own shares of UVXY at an average share price of 58.49 or greater. A price not seen since May 2021! Jeez even I’m not *that* early on the trade. What’s more, is that you would have had to buy at that price and not have accumulated any more shares. If you so much as bought any shares after that date, you would be in the green due to a lower cost basis.
Now yes, this math works for the COVID crash scenario. Okay, well lets say UVXY only spikes a measly 800%. To break even you would need to buy at an 89% loss. That’s like buying UVXY at 41.13… again, in May 2021.
Reference the chart above for other scenarios, but I think you get the picture. Keep this in mind as you consider the percent drawdown in my positions (aka unrealized loss porn) below. Know that my cost basis decreases weekly.
TO CONCLUDE
The 4 phase plan is the same as it’s been with a minor change. I will:
- DCA into a volatility product until capitulation
- Put earnings into SVXY or similar index and ride the volatility back down
- Put money into QQQ (instead of SPY) with as much margin as I can get
- Wait for the real estate market to bottom and buy a house
And the most damning evidence that this trade will work:
My LOSS PORN (so far):
at least they'll be long term capital gains lol
*probably, we'll see
r/wallstreetbets • u/Billyg1be • Feb 12 '23
DD Ride the AI Roller Coaster to Strike Gold: Invest in NVIDIA, ASML, and TSMC and step into the future.
Investing in shovels for gold miners is like betting on a unicorn riding a rainbow while juggling pineapples - a surefire win! These shovels, however, aren't just ordinary spades, but rather glittering tools of wonder like NVIDIA's A100 GPUs, ASML's magic lithography wands, and TSMC's almighty hammer of semiconductor creation.
But wait! The high price-to-earnings ratios and market capitalizations of these companies might seem like clouds in the sky of your financial prosperity. But fear not, for these companies have built walls as strong as a castle made of jellybeans, guarded by dragons made of cotton candy. For instance, NVIDIA's GPUs are like the steering wheel of a spaceship navigating through the vast galaxies of data centers, autonomous vehicles, and gaming systems. The company's grip on these markets, combined with its constant innovation and R&D, make it a force to be reckoned with, like a superhero made of marshmallows.
In the same vein, ASML's lithography machines are like the pen of a wizard, casting spells to create advanced semiconductors. The company has a monopoly as strong as a fortress made of gingerbread, in this market. TSMC, on the other hand, has positioned itself as the go-to choice for chip creation, like a genie granting wishes for companies like Apple, Qualcomm, and AMD.
As the world advances towards the future, with AI and technology as its beacon, these companies are like rockets ready to soar, like a kite on a windy day. It's like what the Pied Piper of Hamelin said, "The journey of AI is long, but it dances towards the future." And as AI continues to dance in this direction, the demand for NVIDIA's GPUs, ASML's lithography machines, and TSMC's semiconductor manufacturing capabilities will only escalate, like a party that never ends.
Investing in these companies is like taking a ride on a roller coaster of wealth, with the future as your destination. The gold miners may come and go, but the shovel sellers will always be in demand, like a song that never grows old. So, grab your shovels, put on your dancing shoes, and let's strike gold!
- I can neither confirm nor deny that this post was written by chatGPT
On a more serious note, what do you guys think about TSML, ASML, NVDA capturing all the investment into the GPT and LLM hype train?
r/wallstreetbets • u/DaddyDersch • 20d ago
DD Pre-JPOW day… the dove or the hawk? 3-6-23 SPY/ ES Futures Daily Market Analysis
Well after two massive green days covering $10+ today started off hella strong only to find ourselves rejecting off a major 5, 15min, daily and weekly resistance at 407.3 intraday.
For those of you that don’t know JPOW testifies to congress tomorrow and Wednesday. This is a yearly thing that he has done since at least 2021.
In 2021 we saw a red day, however, in 2022 we saw a pretty big green day putting in nearly 2%... the question we have to ask is… “will markets listen to jpow and interrupt what he is saying as hawkish finally? Or is this going to be like the last 3-4 times he spoke where the markets had blinders on?”
Based on the last 2 weeks of downtrend (outside of Thursday and Friday) I honestly think markets (and more importantly the algos) are more ready to accept a hawkish JPOW and are more ready to sell off depending on what he says.
SPY SUPPLY AND DEMAND
Taking a look at supply and demand here on SPY daily if you remember I said one of the more short term bullish but longer term bearish scenarios was that SPY would come up and take out 405.74 demand from 2/10. We did just that today. Now what is important is what happens next. With this evening doji star pattern here and the techicals pointing to a new supply being established soon… IF spy closes below todays low there is a very good chance we are going to see this 405.74 demand turned into supply. Turning a demand into supply (resistance) is extremely bearish and would cement not only this level but would also cement a lower supply than the previous ones up in that 414-417 area.
All eyes remain on tomorrows close to see what that technical show. If we establish this 405.2 as supply tomorrow then my ultimate target realistically is 396.5 supply from 2/24. If we can take that supply (currently support) out and turn it into a new demand or reconfirm previous demand (support) at 394.88 that would be very bullish going forward. I would 1000% play a bounce from that 395/396 area back to 405.
SPY DAILY PRICE ACITON
Looking at the daily chart here everything is screaming put here. This evening doji star pattern is one of the highest probability setups for a put. If it wasn’t for jpow speaking tomorrow and Wednesday and my overall lack of trust in this market and the fact that pre markets have seen some incredibly volatile overnight swings… I would 1000% be in at least a 14-30dte put. I fully expect the 400 support area (which is the daily 200ema) to be retested this week when we see a structure like this.
SPY:
Supply- 396.46 -> 414.13
Demand- 394.68 -> 388.52
Daily Support- 404.4 -> 399.7 -> 397.8
Daily Resistance- 405.3 -> 407.2 -> 408.2
FUTURES SUPPLY AND DEMAND
Now if you remember on futures last week we had taken out previous demand and now we are officially in a no mans land. We either need to find the extra strength to push to 4096 before we establish a new supply (resistance) short of that. OR we need to establish a new supply (resistance) and come take out lower supply at 4015/ 3991.
For me personally based on the technical and daily price action we should turn todays candle into a supply (resistance) here at 4055. Doing so will then open up a retrace to “take out” previous supplies at 4015 and 3990. IF we take those out and can establish a new demand before retesting 3960 then I would like a push back to 4096.
FUTURES DAILY PRICE ACTION
taking a look at futures daily price action here are one could imagine the candles are similar to spy (which isn’t always the case) and we are actually seeing a pretty significant reversal candle set up here too. With the SPY and Futures daily reversal set ups I would be surprised to not see a retrace to minimally 4020 tomorrow. 4020 is currently where the daily 8, 50 and 200ema sit. However, there is a chance with JPOW speaking tomorrow that the algos could do something funky which obviously would result in a breaking of technical.
Again if it wasn’t for JPOW I would have felt pretty darn comfortable in overnight 25-30dte puts. But little reason to take the risk.
Futures:
Supply- 3990 -> 4015 -> 4160
Demand- 3920 -> 3960 -> 4096
Daily support- 4050 -> 3983
Daily resistance- 4085 -> 4095 -> 4113
VIX
Overall the VIX is still in a down trend here as you can see. However, it put in a really nice inside day today. Historically speaking inside days result in continuation but is not always the case.
I mentioned on Friday that the 18.2 support touch on Friday should have resulted in a VIX bounce which is clearly did. However, that apparently did not account for the fact that SPY wouldn’t care that the VIX was green all day long too… nor would it account for the fact that yields once again were elevated again while SPY was green.
The only thing that played correctly was that DXY was down just slightly today while SPY was green.
Daily log-
Absolutely a great way to start off the week! No complaints at all. I got burnt as you can see twice in calls though. The first one I stopped myself out of when we were playing around that 406.5 to 407.3 morning/ mid day chop… I entered a call on support (what I thought was) and price action broke a key level. I took my exit and then of course it pushed to HOD. Tough bounce but was the right play and the right stop loss.
Only other loss today was a stop out when we bounced off support and once again had a fake break down.
The morning was extremely frustrating to trade as we were seeing that VOLD was extremely bearish along with the VIX and the yields, however, SPY continued to push up. Made for some choppy trading.
However, the best play of the day was the 1225am retest of 407.3 resistance. I saw it as a short opportunity and took a beautiful 9.4% win. I ended up closing for profits when we came back down and were holding 405.3 support at 1pm. I actually was looking for a bigger recovery back up to 407 again. However, EOD actually ended up being fairly bearish.
I am bearish to neutral. If bulls take back 405.3 tomorrow then I would be bullish until we touch 4096 supply. However, I feel fairly confident unless jpow pumps us tomorrow that we establish a new supply and will push back to that 3990/4015 area this week.
Remember after JPOW speaks we have a TON of data EOW too..
r/wallstreetbets • u/DaddyDersch • 2d ago
DD Bulls are back in control, The Ole Cup and Handle… 3-24-23 SPY/ ES Futures, and VIX Yield Weekly Market Analysis
Note- I will not be around Monday and will be radio silent most of the day. There wont be a pre market update and most likely will not have a daily TA posted Monday night either. Everything will be back to normal on Tuesday.
Just when the bears thought they had it… the bulls said no no you sure don’t…
Honestly what truly is incredible to me… is the fact that two days ago JPOW himself… the literal head of the fed… said “rate cuts are not in our base case” and end the FOMC press conference with that statement… and not even two days later the market said “I hear you JPOW but we are actually going to price in another bps rate cut.”
I mean trust me I understand that the markets don’t trust JPOW and what not… but I mean the fact that during the presser JPOW even said the markets had it wrong and the markets literally did not care is pretty mind blowing.
As of right now by January 2024 there is currently 125bps of rate CUTS priced in… while JPOW and pretty much all of the fed members agreed there would be no rate cuts for 2023… Someone is very very wrong… the question is… who is wrong? And how big of a reaction will it be when that finally comes to fruition.
SPY DAILY SUPPLY AND DEMAND
In an absolute last second move to push green SPY actually impressively established a new demand (Support) on the daily at 393.07 seconds before market closed. Now I mentioned I was bearish until we tested 390.1 support and would be bearish until a new demand (support) was established at which point I would look for an opportunity to ride calls back to 399.1 supply (resistance) minimally.
Well that situation played out nearly perfectly today on a supply to demand level.
With the daily here our target remains 399.07. If we were to break through 399.07 then our target would once again be 405.17. However, if we reject 399.07 again or establish a new supply between 399 and 405 then we could once again look for a short to ride back down.
SPY WEEKLY SUPPLY AND DEMAND
From a strictly supply and demand weekly stand point here we established that 385.9 demand (support) two weeks ago which was just above the 382.21 demand (support) from December. That has since been cemented as a extreme strong support.
As bearish as I was the supply and demand is staying that we should be looking for a long here until a new supply is established (Resistance) or we reach 412.53 supply (resistance).
Based on the daily and weekly supply/ demand currently my upside targets at 399.07 -> 405.17 -> 412.53 or until a new daily and weekly supply (resistance) is established.
SPY DAILY PRICE ACTION
From a daily stand point here price action wise I mentioned my first target was 390.1 and that if we were able to break through that then my ultimate target would be 378. However, today and yesterday has solidified this 390 area as support once again. Not only did the bulls bounce this off a major support line they also managed to bullish engulf and close back over the daily 8 and 20ema.
The next target I have here for spicy on a daily price action stand point is 399 (daily 200ema) and then 405.2.
SPY WEEKLY PRICE ACTION
Now the weekly chart here on SPY is actually a little more difficult in my opinion. The daily I find myself and on supply/ demand extreme bullish. However, the weekly here is clearly still in a down trend (black channel) and has a very possible v bottom with a gravestone doji bearish reversal candle.
Not only that on a weekly timeframe we are still under 396 resistance and failed once again to close back over the weekly 8/ 20ema.
This red v bottom weekly support sits at 398.9 for Monday which basically means that if we do not open green Monday then we break this support and that does open the downside for SPY. However, another potentially more important to support to watch is the 390.1 With us retaking and closing back over that resistance and establishing it as support here does lead to upside potential.
400 is that black bear channels resistance and where we should keep our eyes on. If we break through that then that is further upside confirmation.
FUTURES DAILY SUPPLY AND DEMAND
Looking at futures we have a very similar case here where a new demand (support) was established at 3972 today. With this new higher demand (support) being established over top of 3945 then we only naturally will look for upside. Our upside target should remain at 4040 and 4055. Now as you can see we do have an old demand (now resistance) at 4095.
There is a very real scenario where we actually could push all the way back to 4095 before we reject (establish new supply/ resistance). That would set us up for a scenario to come back down and take out the 4040/4045 supply which would really open up the upside potential here.
FUTURES WEEKLY SUPPLY AND DEMAND
Now much like SPY the weekly supply and demand is extremely bullish. This weekly pop here actually established a new demand (Support) at 3915. And not only that but it took out previous demand at 3972.
With that demand now taken out our upside target remains 4055 -> 4150. Or at least until we establish a new supply (resistance) somewhere between here and there.
Based off futures supply and demand on both daily and weekly I see no reason to short this (now). My first target is 4055 followed by 4150 area.
FUTURES DAILY PRICE ACTION
Now the futures daily here appears to be forming a massive cup and handle… The last time we had a cup and handle this nice was back in December where we saw this rally form 3800s to 4100s.
From a bullish stand point we once again test 3945 support and bounced. Not only that but the daily 8 ema is about to bullishly cross back over the daily 20ema. The bulls one again reclaimed the daily 8, 20 50 and 100ema. The last defense that the bears have here is the daily 200ema at 4010. IF and when the bulls get back through that resistance and close over it the upside potential is very high.
This cup and handle sees a potential breakout to 4160 area and breakdown back to the 4000-4050 area.
FUTURES WEEKLY DAILY PRICE ACTION
Much like SPY weekly this is much more bearish to neutral than anything else is. There is a real clear v-bottom here on the weekly with a support at 3950 and resistance of the blue bear channel at 4040.
Next week 3950 and 4040 should be our key levels.
One thing to note is that the JPM call side of the collar remains at 4020 and the put side at 3600… Most of the time (at least in the bear market) we did see a closure on quarterly opex (which is Friday 3/31) closer to the puts than calls. However, last OPEX we flipped the script and actually ended up closer to the call side. If that is the cast then 4020 will be our target and we should expect price action to be around that level Friday at market close. Though I would really not put the same weight into that as we were able to in 2022.
VIX
Note- skipping on 10yr and DXY today as lately I have not found enough correlation to even find it helpful… but I will as I do not continue to keep an eye on it.
Now once again on the VIX we have found ourselves with an extremely large push up only to by the end of the day give it all back up. With these extremely long wicks to the upside and a closure back under the daily 8 and 20ema on the VIX this too supports a downside move on the VIX and upside move on SPY.
WEEKLY TRADING LOG
There are good days and bad days in the market… today was a bad day… I went into the day being patient and waiting for a more clear sign of a breakout. I unfortunately ended up getting stopped out on calls and puts with fakeouts.
From there it pretty much just went down hill. I was holding those 28dte 392 puts and I was pretty green this morning on them. While I expect a lot of fight at 390.1 I did not expect market to bounce the way it did and fully anticipated a breakdown only to cut my loser EOD. I just found myself almost all day on the wrong side of the play.
That morning call I stopped out of I had a sell order for 5% that didn’t fill and had two plays immediately after that I tried to enter into and was unable to get filled in.
Tough day of trading but ended up putting in a pretty good week though so no complaints from that stand point but I sure gave up a lot today unfortunately.
r/wallstreetbets • u/ProBenji • 9d ago
DD Why First Republic Bank's Stock Probably won't Recover
I did a little digging into First Republic Bank's (FRC) 2022 financials, and there are some troubling details within. If FRC recorded their assets at fair value, they would have a negative stockholder’s equity (book value) given the unrealized losses that do not appear in the financial statements (aside from the footnotes where I got the information). Their loan book is valued on the Balance Sheet at a $22 billion premium over their fair value, and their Held to Maturity (HTM) Debt Securities (i.e. treasuries and bonds) are valued at a $4.7 billion premium over their fair value. So like SVB, FRC has a large collection of assets that have lost a tremendous amount of value since the Fed started hiking interest rates.
Additionally, if FRC was to liquidate all of it’s assets (aside from real property it owns, which I excluded from the analysis because real estate is not a liquid asset) in an attempt to stem a bank run on deposits, it would have a $1.27 billion shortfall based on the fair value of its assets at the end of 2022. In other words, if FRC sold all of its investments, sold its loan book, and used all the money plus its existing cash balance, it could not pay back all of its depositors if they wanted all their money back.
TLDR; Stock is down over 70% this week, despite the $30 billion injection of liquidity courtesy of JPM, Wells Fargo, Citi, etc. The valuation on the stock seems to be more in line with reality now, with the book value of FRC's assets being greatly inflated compared to the fair value.
**Full disclosure, I own 30 shares of FRC.
r/wallstreetbets
•
u/DaddyDersch
•
Feb 16 '23
DD 50 BPS Hike… the nail in the bear coffin… 2-16-23 SPY/ ES Futures and Tesla Daily Market Analysis
note- MODS reposted due to my chart on the VIX having a banned ticker in it... forgot to crop it out this time. i wasnt mentioning banned ticker its just the way tradingview displays the VIX for some reason...
So this morning as I said we had PPI and jobs data and there was a chance for quite the negative reaction. Well as you see below that data came in VERY HOT. PPI MoM went from -0.4% to 0.7%+ that is one hell of a rebound!
Now add what FOMC said about numerous rate hikes and CPI not being under control, CPI coming in over consensus and showing that the decline is slowing AND factor in PPI now and we finally might see the wind taken out of the bulls sail…
Something I don’t talk about much because honestly I am just not well versed enough in it to explain well enough is that bonds and equities have NOT been behaving correctly. We have been seeing this whole rally the 2, and 10yr yields massively rally along with DXY while you guessed it… SPY rallied too… those two should not really be doing that at all..
Now something that happened yesterday and post CPI is that the peak fed funds rate expectation has steadily rose this weak but the markets did not negatively react to that either.
We might finally be seeing… that market reaction.
Now here is something very interesting to think about… We have been under this impression that we are going to continue to see 25bps hike rates until we finally get to the “end” however, today for the first time the idea of 50bps was introduced by two fed members. Now granted JPOW himself has not said he would do a 50bps hike but there is no doubt that he isnt done with rate hikes…
Taking a look at the CME expected BPS hike for March meeting it has actually rose to 18.1% from about 12% this morning. What actually is more impressive about this is that last meeting a 50bps wasn’t even in question.
So the question now remains… did the market finally put a nail in the bears coffins? Is this market FINALLY going to accept the fact that inflation is not over, and that we are not going back to ATH and that the market is actually not in a good place? IS this finally the end of this insane bully rally we have been on for almost 2 months now? We will find out tomorrow…
Now we have seen this time and time again where we break down and test the 20ema then bounce. However, this time really is quite different… we are actually seeing this as a break through of this bull support (again) and this also at the same time is a rejection of the daily 8ema.
Now this long wicked candle here is not the most ideal candle for downside continuation but it can be a continuation candle.
The biggest thing I want to note here is that we did clsoe under that key 408.8 support that most of this consolidation has happened in. With that breakdown it would be natural to assume that we touch 405.3 support tomorrow.
405.3 still remains critical support. If we see that level broken tomorrow there is a very high probability that this rally is going to see an abrupt end and we could be looking at the 390-400 area by end of next week.
Key SPY Support- 405.3 -> 402.9 -> 400.8
Key SPY Resistace- 408.8 -> 410.2 -> 414.1
Futures in my opinion is far more bearish then SPY. Something else that is very interesting to me here on futures is the fact that for probably the last 3-4 days if not longer futures has (as evidence by these lower wicks) been very red after hours and has seen major reallys intraday. Now that we finally (maybe) have a true reason to sell and futures already has been in sell mode.. I am very curious to see where futures is going to take us overnight.
Futures here we also broke the bull channel support with a massive double top off of 4160. With that rejection there and losing the daily 8ema we are in store for a bigger support test. If we happen to lose that support this is going to see an even large sell off.
What I am watchign for here is this key 4095 support. I will be very curious to see where futures closes here at 5pm. If it drops and closes under 4095 that is even more bearish and really would open the idea for a bigger dump tomorrow.
The big level here is the daily 20ema at 4093. If we lose that and especially clsoe under that we are likely in store for a continuaton sell off next week.
Key Futures support- 4095 -> 4085 -> 4040 -> 4030
Key Futures resistance- 4122 -> 4160
Tesla caught a really bad news day today and we might perhaps also finally be seeing the end of this rally.
We have not only a bad news day for Tesla but with SPY selling off AND back to back rejections off the daily 200ema at that critical 215 level I would nto be surprised to see a bigger sell off tomorrow.
Tesla is now at a test of its daily 8ema and very well could find itself testing the daily 20ema down near 184 tomorrow or early next week.
One thing to keep in mind here though is that tesla IS still in its bull channel. Realistically until we break that support it is only speculation on whether we are going to see a further sell off on tesla or not…
However, breaking below that going into next week could set up a very nice short opportunity especially If the overall markets are on board too.
Key Tesla Support- 202 -> 196.8 -> 191.8 -> 183.6
Key Tesla resistance- 211 -> 215 -> 219.2
The VIX just managed to close a huge 10.65% green day today… this is the biggest move up on the VIX since December 22nd(9.57%+) and December 12th (9.6%+).
This is the first 10% green close on the VIX since September 13th which was a 14.33% green day.
With the VIX double bottoming perfectly off 18.2 and closing back over 19.7 we could be looking at an even bigger push up into the 21-22 area tomorrow.
Interestingly enough tomorrow is monthly OPEX and we have a really nice max pain down at that critical 405 support area. Earlier in the day when we were near 414 it seemed like a dream that we would touch 405 tomorrow and I would never take a trade strictly based off max pain but the chances of touching 405 tomorrow has significantly increased.
One kind of interesting data point for tomorrow is the fact that the put call ratio is 2.72 for tomorrow… that is about the highest PC I have seen in weeks on SPY.
I wouldn’t be surprised to see a bigger dump tomorrow and we could even end up with a bigger EOD rally too with all that put OI coming off the books…
Tomorrow could be one extremely volatile day…
Daily log-
After a pretty crappy three days of trading this week I was very happy to close out a green day… sure its not a huge green day and sure its still a red week but going 3 for 4 today was a good day for me. No complaints at all.
Interestingly enough I took the first two trades before 1030 am and didn’t take that last one until 1pm. I just as much as I knew it was a buy the dip day there just was zero movement.
Pretty much from 11am until 1215pm it was untradable and then we were looking for that bigger EOD bounce after Biden briefed us on aliens and well that never came. I have a pretty hard fast rule of Not trading power hour… have been burnt WAY too many times and was happy to sit it out even though I would have liked to have entered a put.
I did take a put end of date on futures that I just closed out a 20.3%... will include that in tomorows log as that was technically a swing play and closed after markets closed at 415pm for the day.
Overall tomorrow is Friday and it should be a wild end to the week.
To me… a closure under 408.8 is very bearish for next week and I honestly wouldn’t be surprised to see a bigger sell off next week.
If by some chance the bulls can once again buy the dip and put this back over 410 we might see some upside next week or find ourselves once again in another sideways week.
r/wallstreetbets • u/Due_Reflection_2049 • 2d ago
DD Now Hiring Repo Men for the Pounding Banks and Dealers are Going to Feel Soon!
Hello my fellow Regards,
The perfect storm has been brewing for some time now and I believe CarMageddon is finally upon us. I will keep it short and sweet so both smooth and wrinkled brains alike can profit off my DD.
TLDR: 1st, for you Smooth Brains who wont spend the time to read through the Images and Links provided, you need to buy puts on most your Public Car Dealers and your heavy auto lenders in the middle of April as we rally.
Thesis: Used Car Value are going to plumet, leaving both Banks and US Car Dealers holding some hefty losses in Q2,Q3,Q4.
Why?: No secret to anyone who has thought about buying a car the last year but Inflation has had an Inverse effect on Automobiles, especially Used ones, until now. March of 2021 there was a fire at the semiconductor factory in Taiwan, this caused huge shortages of new cars, thus increasing the price of used. Prices on New and Used cars increased much more dramatically due to nearly free money, caused by all the QE and lots of "Regards" buying depreciating assets way over value. It was kind of crazy, 10k+ over sticker and 30+% more for the same used car that they could have bought for that much less just a couple months prior. This irrational exuberance bubbled out of control and greedy banks handed out loans left and right at crazy multiples to help assist the US in the "Great Reopening". This helped Public and Private Franchise Dealers alike make record profits and their stocks have been soaring at ATH since. All the while, these Dealers and Banks have all but guaranteed their avg customer a fate of negative equity and or a likely visit from the REPO MAN.
How did this happen?: You see my friends, here in America we are truly "Regarded". When we want something, especially something that we know is bad for us, we sell ourselves on why its ok. Sure, its a terrible financial decision but the bank is ok with lending me the money for it, so it cant be that bad right?... It's kind of like 0 DTE options, its completely regarded, but the bank is ok with me doing it. LOL
I digress... Well now everything is about to change. Cars are starting to fill back up on the new car lots and for the dealers who still don't have any New cars, that's a bigger problem for their earnings. Used car prices have spiked this month do to seasonal buying for tax time and if demand doesn't tick up this tax season, well then these Auto Dealers just bought their largest liability(used cars) at the top. Basically car dealers are doing what most you regards did in Nov-Dec 2021 before everything came crashing down. I figure, with the soaring delinquency's and revised used car SAAR, we are about to see a huge drop in used car prices, dealers profits and a huge increase in banks losses do to this economic hurricane the FED, Bankers and QE/QT has created.
When is all this going to happen?: I think it will all come to a head in the next 30-60 days. Why am I so confident prices will drop? I'm glad you asked, check out the graphs and links provided, its pretty clear CarMageddon is upon us.
How am I going to play this?: On the next rally we get I am going to short the top auto lenders in the attached links. I have already opened multiple positions on Public car dealers and am doing so by actually shorting the stock because premium on puts are regarded. As far at the REPO MEN go, I am long RECOVERY EQUIPMENT COMPANY'S, I have already started accumulating one but its market cap is too low to be mentioned as of right now.
Best of luck to all you regards, hope you make a bunch of money on this trade. As always boys and girls, this is a casino and this post is absolutely not financial advice. Cheers my fellow "Regards", its MILLER time!
r/wallstreetbets • u/DaddyDersch • 18d ago
DD Day two of JPOW: chopped up… All eyes on Jobless Claims Tomorrow… 3-8-23 SPY/ ES Futures, VIX, DXY and 10YR Yield Daily Market Analysis
Well this has to have been one of the most frustrating days I have traded in a long time. Absolutely zero follow through and some absolutely erratic candle movements chopped me up today. Lets take a look at where the dust has settled…
All eyes are officially on jobless claims tomorrow… why is jobless claims tomorrow important? JPOW the last two days has basically re-iterated and other fed talking points have continued to say that we are data dependent and even going into next FOMC we are data dependent. As you cans see by this chart here that we have been trending down on jobless claims (as in there are less and less people saying they are jobless) since December 11th and around the first week of February we “bottomed.”
The last 3 jobs claims has been higher than previous… why does this matter? Because if job claims are rising now then that would indicate the economy is “weakening” which then means the feds rate hikes are working. The biggest concern for the fed is that despite what they do the economy as it has since summer continues to ramp up.
This number is projected at 195k tomorrow which would mean a 4th week in a row that claims rise (economy weakening) and that would be extremely bullishly received. However, if that number comes in below 193k again tomorrow that could signal jobs trending back down and the fears of a 50bps grow…
As of now… we have a 77.9% priced in chance (expectation) of a 50bps at the march 22nd meeting which I absolutely find incredible. This is where im at…
markets gonna market until CPI -> CPI is going to come in better than expected (aka bullishly received) -> algos are gonna pick up on that and dump the chances of a 50bps to 0% that day… -> massive rally into FOMC -> FOMC becomes the top when the dot plot and fed funds rate projections come out terribly hot and unexpected.
I don’t think we actually get a 50bps… unless we get a true CPI YoY/ MoM rebound which I don’t forsee, however, I am waiting for the consensus to come out this week still.
SPY SUPPLY/ DEMAND
Today the daily chart came down and touched the 396.54 supply. Now this came within 4 cents on the daily time frame which on a daily time frame is within the room of error. However, this is a key level to keep in mind if we reject the downside. With the current technical on SPY we are actually looking to establish a new demand (support) at this 398.2 range. If we were to put in a green day tomorrow, especially if we could see a close over 401.5 there is a solid chance that today and yesterdays lows establish a new demand (support) at 398.2…. a demand being established over previous demand at 394.68 would be extremely bullish and I would once again start thinking about a push back to the upper range resistance of 405.17.
Spy very well leading into CPI next week could find itself stuck between a 398 and 405 choppy range.
SPY DAILY PRICE ACTION
From a daily price action stand point we have reached a bounce point. This pattern actually is playing out beautifully. If you go back to Thursday we started a three day $12+ pump. It was natural to expect that to result in a retrace to back fill some of these levels. Now that we have back filled the actual daily gap and came down to find support on the daily 100ema… with this morning doji start pattern we should expect a push back to 402 tomorrow minimally. That would put us back at a retest of the daily 20ema.
Now that’s from strictly a technical standpoint… IF jobs come in low and algos dump us then I would start targeting 394.6 demand area for a potential bounce.
We have found ourselves exactly where we were on Monday. From a technical/ price action and even supply/ demand stand point this is 100% a call opportunity and I 100% expect upside… however, much like Monday we had a major catalyst that can negate the technical temporarily or can support the technical much like Tuesday did.
SPY Levels:
Supply- 405.17 -> 414.13
Demand- 394.68 -> 388.52
Daily support- 398.4 -> 396.4 -> 394.6 -> 392.6
Daily Resistance- 399.6 -> 401.5 -> 404.5
FUTURES SUPPLY AND DEMAND
Taking a look at futures supply and demand we have found ourselves in “no mans land.” We are under the recently established 4055 supply and we are just over the 3960 demand (support) below us. Looking at the technical if we were to have another bullish day tomorrow we could be attempting to establish todays low of 3990 as a new demand (support). That would much like SPYS daily S/D be very bullish. With the demands (supports) stacked like that from 3920 to potentially 3990 (this would also turn previous supply of 3990 into a new demand) that is very bullish. I would then look for a push back to 4055 and potentially even attempt to take out demand at 4096 if we got a big enough bounce.
FUTURES DAILY PRICE ACTION
From a daily price action stand point on futures is much of the same with this classic morning doji star/ double bottom off 3990 support today. This on futures is also a retest and support holding for the 100ema.
With this price action (again dependent on data…) we should see a push to the upside tomorrow. My ultimate futures target is 4020 which would give us a close back over the daily 8, 50 and 200ema and ultimately would make me expect a rally back to the 4053 supply and possibly even as high as 4095 on Friday depending on data.
However, in the chance that data is negatively received my ultimate downside target is a support test of 3920. This should be a major support test and as long as that holds then ultimately we should expect a push back to the 4000s. However, a closure under 3920 would be extremely bearish and could very well start a further sell off.
Futures Levels:
Supply: 4055 -> 4160
Demand: 3920 -> 3960 -> 4096
Daily Support- 3990 -> 3955
Daily Resistance- 4020 -> 4055 -> 4085
VIX
The VIX is actually in an interesting place. I also mentioned yesterday that I was surprise with the fact that a 50bps is now nearly 70%+ “priced in” that the VIX did not break through 19.7. That is very odd if you ask me… now granted markets have absolutely been focusing on the use of 0dte options instead of longer DTE… but if markets truly “believed” that we were going to get 50bps, and that cpi would be red hot we would be seeing a much longer and more importantly sustained spike on the VIX. However, today we are seeing yet again the VIX unwind.
The VIX remains at that 19.7 resistance at in a bear flag breakdown pattern that should lead once again to another drop to that 18.3 support rea.
DXY
Now im going to start this with a disclaimer… I generally have watched the DXY and 10yr yield since probably mid summer time. However, I have never once taken a trade solely based off it. I do enjoy watching in general dollar/ yield up = spy SHOULD be down… now many of you know that does not always happen. Yields/ DXY have been moving in tandem with SPY which is interesting. Some are even saying that yields have finally gone too far… however, long story short im going to start watching DXY more closely and see if we can see anything. Merely going to talk out loud and see if there is any bigger correlations we can catch.
From a price action stand point DXY is in an overall massive rising wedge that dates back to January/ February. As of now price remains over its daily 8ema and had officially closed over the 105.6 level which was the high back form December.
Just for reference at this time period when DXY was at 105.6 area in beginning of December SPY was at trading in the 380s range (this was directly post December CPI). This means we are about 4.7% higher on SPY now than we were back then.
Current trend would allow for DXY to fall as low as 104.7 by Monday (day before CPI) and rise as high as 106.4.
10YR YIELD
I am starting with the same disclaimer here that I am merely watching the 10yr like this in order to see if we catch anything to help us.
The 10yr is in this same rising wedge pattern as DXY. Which I actually find interesting as SPY daily is in a breakout triangle pattern which I full expect it to hold within leading into CPI. This rising wedge on DXY/ 10yr COULD be the hint that we actually see a breakout to the upside on SPY which also supports my thesis on a bullishly received CPI.
Currently the 10yr is sitting just under 4% after briefly breaching it today. For reference on the 10yr the last time it was this high was back in November. At which time SPY held that 395 to 405 range leading into CPI before it saw the bigger dump. In that sense we are actually spot on with where we should be here…
From a TA stand point we actually have a pretty nice but ugly head and shoulders or W pattern formed here with our lows at that 3.4% area and highs here at the 4% area… that would indicate that the 10yr will sell off and that would lead to a pump on SPY…
Overall from a macro stand point 10yr and DXY suggest we are in a place where they are likely to retrace which might be support by jobs data and CPI and that could lead to a rally on SPY.
DAILY TRADING LOG
I got pretty chopped up today and some how managed to put in a decently small red day and still have a pretty nice green week. I recognized early on today that morning range and chop. I took the first opportunity for a call when we broke out over 399 and closed there this morning and was immediately stopped out. With the massive wicks on the 15min chart I once again waited for the breakout and when we broke out around 1145 and closed a new HOD I once again was immediately stopped out.
I still looking back have no good reason or data to support why from 12 until 130pm we went on that massive dump from HOD to LOD like that. It really was fully against the technical at the time.
Best play of the day was the 14dte calls I took near the 3971 support are on futures (a major weekly support). That rogue EOD pump printed calls nicely and turned what was going to be a pretty sour day into just an annoying day.
Frustrating to feel like I was behind and buying the top/ bottom on every play. However, I will say that I followed my rules and almost every play I took everything I look for in an entry (especially the first 3 calls I stopped out of) were all 100% signaled.. as in I have everything I look for with a perfect call entry. I wont let one day change my strategy as its tried and true… after a successful day yesterday with the volatility today was a humbling reminder that FED days do not generally fit into my ideal trading strategy.
At the end of the day though tomorrows a new day and there will always be a new day… we have to at time know when to walk away and know when the day just isn’t going to give us what we need.
r/wallstreetbets
•
u/DesmondMilesDant
•
13d ago
DD Wall Street Newsletter S02E08: No one saw it coming ( Season Finale )
This is going to be the last newsletter in this series which just got darker.
Disclaimer :
- All the events in this show are entirely based on real-world financial events.
- The following show contains coarse language in some instances but its intention is not to offend anyone but to be taken as a joke.
- You are advised to do your own research beforehand and not construe any kind of financial advice from it.
- Finally, apologies beforehand for spelling and grammar which at many times might feel like an 8yr old child.
Contents :
- Fictional Story
- Intro
- Experiment
- Conclusion
- Result i.e. TLDR
- Invalidation
- Position
- Final Thoughts
- Acknowledgment
Fictional Story :
*Opens door in US office ( March 6, 2023 )
( Investors = Legendary Investors )
Investors: Hey Des long time no see. Where have you been?
Me: Didn't I say I was in India?
Investors: No, we meant. Why didn't you come to the party last Friday night hotel? We all had so much fun. We missed you, man.
Me: Well I was just busy.
Investors: Busy? What have you been doing behind our backs?
Me: Nothing. I was just watching tv shows and anime that I missed. Thats all. I was really tired.
Investors: You know that we don't believe you right?
Me: Why would I lie to you guys? I have always been loyal, and honest and have given everything to this company.
Investors: If you have given everything you wouldn't have made a silly mistake you know. You were wrong about high vix Jan. A lot of clients lost their money.
Me: God! Are you guys going to keep it hanging over my head for the rest of my life? I delivered the Q1 disaster and that was the promise I made in the summer of 2022 report. How would I know that the market was going for a huge sideways pattern back then? Also, I took a winter vacation to attend my sister’s wedding.
Investors: Nah you were just wrong.
Me: I hate you guys. I am going to the club to meet my friends from the tech space. You guys have fun.
Investors: Well Des you know we have some information for you. We are planning to use a legendary pattern on Wall street again. Do you want in just like the last time?
Me: But haven't we already used the 7yr one in sept the last yr? Liss Truss had to resign because of that. I think it was the last jutsu in our arsenal. What else pattern there is left?
Investors: God you and your anime reference. We never get it. Well, things have changed my friend.
Me: What are you guys talking about?
Investors : *Shows chart. Well, this is the chart pattern one of our guys drew.
Me : *looking at the chart. This is impossible. How is this supposed to happen?
Investors: Well we didn’t say it will happen but there is a slight possibility it may happen. This is an even rarest of all patterns. No one on Wall street knows about it. They are always late to find this kind of thing. This has happened just three times in the entire history of America.
Me: C'mon guys. You promised we would long America after $3200 and then we were supposed to go ATH and analyze things again.
Investors: You are a simple guy Des. Go enjoy your free time. We will talk more later.
Me: Sigh! Do whatever you guys want. See y’all later. Peace.
* Leaving office
Me : ( Should I give Wsb a heads up. Hmm )
Intro :
Respected Traders and Investors,
A very Good morning to y’all. How are you folks doing?
No seriously guys, how are you doing? I really am concerned and I wanted to check up on you so tell me you are fine and you’re growing vegetables in your garden. Tell me you don’t have your entire savings in your bank account and have some cash lying in your corner. Tell me your portfolio is positioned for short equities + long bonds + long gold which can help you fight any kind of environment going forward. Every important detail was discussed in this series. Everything! So if any of you are experiencing a bad time then I am extremely sorry. I cannot help you more than this. I mean the whole purpose of this series is to protect the little guys so that big guys can never screw us. Whatever curve ball they throw at us we can easily survive it together against any of their shenanigans.
Now you guys might be like: “Calm down friend. Uninsured depositors are getting their money back. Everything is just fine. Fed is back to printing days. Take your medicine or change your doctor. We need your calm composure, not your Adderall dosage character”
Yeah guys I think you’re right. I am not doing great. I have to quit now. I get very emotional sometimes seeing my Twitter feed. This positional trading was really all fun and games until banks start collapsing. Sometimes I feel like puking tbh. No guys I am not drunk today and neither have I partied hard this Friday night with my bear friends. It’s just that all of my tech bro’s were gonna be in huge trouble and if going forward systemic risk really generates up in the system they will get laid-off come later this year. So it’s just really sad you know. But then there are my finance bro’s as well who don’t want uninsured depositors over 250K to have their money back. They are saying why they even put money in SVB in the first place. Why didn’t they do research? So I am still kinda confused tbh and my head spinning. I don't know who is right or wrong. But one thing we can all agree on is at least there shouldn’t be any buyout for equity and bondholders in the banks.
So moving forward :
It’s been more than two weeks since I last posted my two “Dragon King Newsletters”. I am seriously regretting my decision now. Why did I ever post them in the first place? I was really afraid and scared of what I saw back then, a technical storm was brewing up in the forex market and especially the bond market which eventually I feared would spread across the stock market and other kinds of global markets as well. Look around you now. All of this really impacted people’s daily lives. Forensic experts in economics, the stock market and people who hold high positions in our society were all over the place, be it on Twitter, Youtube, and Reddit asking questions and trying to examine the problem through the lenses of financial and tech perspectives. Everyone on the street has his/her opinion and talks about how no one saw it coming this early. The key word is this early.
Now some of you might be wondering “Dude you saw it all happening in Q1 back in the summer of 2022. You were not right about high vix Jan but you were definitely right about something by the end of march 2023 i.e. Q1 disaster. You totally predicted all of this.”
No guys if I am being honest I did not foresee this. Yeah, it’s completely true this is not the kind of event I foresaw. I saw another multiple compression ( 16 PE ) meets a low EPS (210-200), a basic principle leg down when yields shoot higher. This was not a multiple compression, this was going to be a freakin flight to safety trade for the Banking crisis recession. This could have easily turned into a Black swan kind of event. All of this shouldn’t be happening right now this early in 1H 2023. This playbook was to be deployed in the 2H of 2023.
Those who don’t know what I saw have to go back and read those newsletters titled S02E06 and S02E07 when 10yr bond yields were trading around 3.36%. People back then were saying “Hey we have a new bull market” “No recession” “Soft landing” “No landing” blah blah. They even said historically low “equity risk premium” doesn’t mean anything and they have been saying “Yield curve inversion” doesn't mean anything either for the last 1 yr coz conventional wisdom would say resteepening of the std yield curve above 0% causes recession. What else they said oh yeah bond yields higher than the s&p500 yield doesn't mean anything either. And then they always kept repeating buy stocks coz no one can time the market. Time in the market matters more than timing the markets. And the famous one of all "Everything is priced in already. Even JP Morgan's collapse tomorrow will be priced in. The market is always forward-looking and is so efficient"
What a fucking BS this all is. We have been fed lies by everyone in the last couple of months. And if it was not for the Fed and Treasury which meets every week with the top 4 banks this crisis would have resulted in a Black Monday selloff. Btw the market hasn’t opened yet and I still have some time before I complete this letter. So I gotta hurry.
Now I will just stop ranting and move on to the analysis we will be doing here today. I am sure many of you are smart enough to figure out what. No, I am not going to talk about what everyone on Twitter is talking. I mean you guys don’t come here for things that everyone else knows. You guys come here to get my unique perspective on the financial market and how I see it going from here. That’s what we do here. We will leave the forensics to SEC, Govt, Treasury, Fed, and every Economist on Twitter and Yt. That’s just not how we roll.
Experiment: The Legendary Pattern 2.0.
( For 1.0 you’re advised to read this. Also, I want 47 beers. It's still not delivered. )
Stock Market is about to collapse in 47 days...!!! : wallstreetbets (reddit.com)
Understanding Banking Crisis :
There have been many banking crisis ( on top of the recession ) in America’s history but you have to understand that Dow Jones only go as far as 26 May 1896. That means the models you will be creating for your organizations and your clients will not take into account many banking crisis before that. So in layman's terms, the industry std is basically a -50% drop in a recession with a banking crisis on top of it. A normal recession will always be -30% but a deep recession goes -37% on avg meanwhile a shallow one is -25%.
So let’s first verify this statement of a -50% drop in a recession involving a banking crisis.
1907 :
Theory :
The Panic of 1907, also known as the Knickerbocker Crisis, was a financial crisis that occurred in the United States in 1907. The crisis began in October of that year and lasted until early November. The panic was caused by a number of factors, including the failure of several banks and trust companies, a run on the banks by depositors, and a shortage of cash reserves.
One of the main causes of the crisis was the overexpansion of credit in the United States. During the years leading up to 1907, there was a boom in the stock market and a period of rapid economic growth. Banks and other financial institutions were eager to lend money to businesses and investors, which led to a surge in credit. However, this expansion of credit was unsustainable, and when the economy slowed down, many borrowers were unable to repay their loans.
Another factor that contributed to the crisis was the proliferation of trust companies. Trust companies were similar to banks in that they accepted deposits and made loans, but they were not subject to the same regulations as banks. As a result, many trust companies engaged in risky lending practices, which left them vulnerable to financial shocks.
The crisis began on October 21, 1907, when the Knickerbocker Trust Company, one of the largest trust companies in New York City, announced that it was insolvent. This caused panic among depositors, who rushed to withdraw their money from other banks and trust companies. This, in turn, led to a shortage of cash reserves, which made it difficult for banks to meet the demand for withdrawals.
To prevent the crisis from spreading further, a group of bankers, led by J.P. Morgan, intervened. They provided loans to struggling banks and trust companies and persuaded other bankers to do the same. They also organized a consortium of banks, known as the Clearing House Association, which agreed to lend money to any member bank that was in need.
Through these actions, the bankers were able to restore confidence in the financial system, and the crisis began to subside. However, the crisis had a significant impact on the economy. Many businesses were forced to close, and unemployment rose. The crisis also led to increased scrutiny of the banking system, which eventually led to the creation of the Federal Reserve System in 1913.
In conclusion, the 1907 banking crisis in America was caused by a combination of factors, including overexpansion of credit, risky lending practices, and the proliferation of unregulated trust companies. The crisis led to a run on the banks and a shortage of cash reserves, which threatened to spread throughout the financial system. However, the crisis was ultimately contained by the intervention of a group of bankers, who provided loans and restored confidence in the system. The crisis had a significant impact on the economy and led to increased scrutiny of the banking system, which ultimately led to the creation of the Federal Reserve System.
Technicals :
Now that we know a little about the Panic of 1907 from our friend AI. It’s time to observe it through the lens of technicals.
What we can observe here is recession was about to have a -26.81% drop and then we were supposed to have a new bull market after bouncing from 200wMA but then because of the banking crisis on top of it the drop was almost -50%. The exact number would be -48.54%. So how do we identify when the banking crisis will hit on top of the recession? Well, look no further than 200wMA in DJI. When price action comes visit it 2nd time you need to remember it acts like a quick sand and then you know you are going to have dark ages all over again. Now it’s entirely up to you if you chose to fight the dark ages or not with the help of flip-flopping Federal Reserve behind your back.
To summarize if you observe the recession drop was -26.81% ( wave 1 down ) and then another -28.16% ( wave 5 down ) for the banking crisis. The overall drop was = -48.54%. Wave 2 to 3 of -18.56% was just a confirmation wave that we are going to have a banking crisis. Easy peasy right.
1929 :
Theory :
The 1929-1932 banking crisis, also known as the Great Depression, was a severe economic downturn that occurred in the United States and other parts of the world during the 1930s. The crisis was triggered by the stock market crash of 1929, which led to a sharp decline in economic activity and widespread unemployment.
One of the primary causes of the crisis was the overexpansion of credit in the 1920s. During this time, there was a speculative boom in the stock market and a period of rapid economic growth. Banks and other financial institutions were eager to lend money to businesses and investors, which led to a surge in credit. However, this expansion of credit was unsustainable, and when the economy slowed down, many borrowers were unable to repay their loans.
The stock market crash of 1929 marked the beginning of the crisis. The crash was caused by a number of factors, including overvaluation of stocks, excessive speculation, and a decline in consumer spending. The crash led to a panic among investors, who rushed to sell their shares, which caused stock prices to plummet.
The decline in stock prices had a ripple effect throughout the economy. Many businesses were forced to close, and unemployment rose sharply. This, in turn, led to a wave of bank failures, as businesses and individuals were unable to repay their loans. As banks began to fail, depositors rushed to withdraw their money, which led to a shortage of cash reserves and further bank failures.
To address the crisis, the US government and the Federal Reserve System implemented a number of measures. The government passed a series of laws aimed at regulating the banking system and restoring confidence in the financial system. The Federal Reserve System implemented a number of monetary policies aimed at increasing the money supply and lowering interest rates.
However, these measures were not enough to stop the crisis from continuing. The crisis persisted until the late 1930s, when the US government began implementing a series of New Deal programs aimed at stimulating the economy and creating jobs.
In conclusion, the 1929-1932 banking crisis was caused by a combination of factors, including overexpansion of credit, a speculative boom in the stock market, and a decline in consumer spending. The crisis led to a wave of bank failures, which contributed to a sharp rise in unemployment and a decline in economic activity. The crisis was addressed by a combination of government regulation and monetary policy, but it persisted until the late 1930s, when the US government began implementing a series of New Deal programs. The crisis had a profound impact on the US economy and the world, and it led to significant changes in the way that governments and central banks approached economic policy.
Technicals :
Now that we know about the Banking crisis of the Great Depression with the help of our AI friend. Let’s look at technicals, shall we? Don't be scared.
I am sure many guys on Twitter or Reddit or Youtube have already bored you with this pattern which totally looks like a period from 2000-2022. But these folks have no clue how to use it. Allow me to show you how. Just like the prev pattern we had a -46.20% drop for recession. The reason we had the drop this much was due to the fact that it was a gigantic super-bubble. That’s why it was 2x amplified. So you have to divide everything by 2. Hence 23.10% seems fair for a drop till 200wMA i.e a recessionary drop. Then again we had a rally up which btw in the textbook is called back to normal. It was only a few months later that we realized “oh uh” there is going to be a banking crisis on top of it. Hence the stock market came to test 200wMA a second time. Just like prev 1907 times the MA acted like quicksand. Hence initiated the financial crisis drop on top of it in wave 5. The overall drop had to be -45 to -50% but it was amplified by a factor of 2 hence the drop was almost -90%.
2008 :
Theory :
The 2008 banking crisis, also known as the Global Financial Crisis, was a severe economic downturn that began in the United States and quickly spread throughout the world. The crisis was triggered by a number of factors, including the subprime mortgage crisis, the securitization of mortgages, and the use of complex financial instruments.
The subprime mortgage crisis was caused by the widespread issuance of subprime mortgages to borrowers who were unlikely to be able to repay them. These mortgages were then packaged together and sold as securities to investors, many of whom were not aware of the risks involved. When many of these borrowers defaulted on their loans, the value of these securities plummeted, which led to a crisis in the financial markets.
The securitization of mortgages and the use of complex financial instruments, such as collateralized debt obligations (CDOs) and credit default swaps (CDSs), also contributed to the crisis. These instruments were used to spread the risk of default across multiple parties, but they were often poorly understood and underregulated, which led to a systemic breakdown in the financial system.
The crisis began in the US housing market but quickly spread to other parts of the economy. Many large financial institutions, including Lehman Brothers, Bear Stearns, and AIG, were heavily exposed to these complex financial instruments and suffered massive losses as a result. As these institutions began to fail, there was a panic among investors and depositors, which led to a shortage of liquidity in the financial system.
To address the crisis, the US government and other governments around the world implemented a number of measures. The US government passed the Troubled Asset Relief Program (TARP), which provided funds to troubled financial institutions in exchange for equity stakes. The Federal Reserve System implemented a number of monetary policies aimed at increasing the money supply and stabilizing the financial system. Central banks around the world also implemented similar measures.
The crisis had a profound impact on the global economy, and many countries experienced a sharp decline in economic activity and a rise in unemployment. The crisis also led to significant changes in the regulatory landscape, with many governments implementing stricter regulations on financial institutions and complex financial instruments.
In conclusion, the 2008 banking crisis was caused by a combination of factors, including the subprime mortgage crisis, the securitization of mortgages, and the use of complex financial instruments. The crisis had a profound impact on the global economy and led to significant changes in the regulatory landscape. The crisis highlighted the need for better risk management and regulation in the financial sector, and it continues to have an impact on the way that governments and financial institutions approach economic policy.
Technicals:
It's the same thing happening over here and most of us have probably lived it when we were young. If you were not even born when this was happening I suggest kindly step out of the market. This analysis is just not meant for you 14yr olds.
2022 :
Well, let's see how this turns out. But the one thing you guys can expect from this is that the bubble really is not in SPX and DJI. I have been saying this since last summer. It's the Nasdaq that needs to die. Yeah, tech buddies you guys need to go. Tech is a boom-bust cycle of 20yrs. You have to come to terms with this. You just cannot escape your fate. It's just like your crypto buddies who were not able to escape their 4yrs fate. So I humbly request you to kindly give up. You are just overloading the banking system.
Conclusions :
The banking Crisis Recession can be categorized into 5 wave principles. No, I am not trying to do an Elliot wave here. So please advanced technical traders do not get confused.
Wave 1 : ( 200wMA I )
Recessionary drop.
Wave 2 : ( Big Impulse I )
Impulse up i.e. Back to Normal.
Wave 3 : ( 200wMA II )
Confirmation signal for Banking Crisis coming where the quicksand happens and 200wMA acts like a magnet.
Wave 4 : ( Short Impulse II )
Small impulse up till 200wMA as resistance.
Wave 5 : ( Thee final Drop )
The Banking Crisis Unleashed.
| S.No | Wave 1 | Wave 2 | Wave 3 | Wave 4 | Wave 5 | Overall |
|---|---|---|---|---|---|---|
| 1907 | -26.81% | +12.78% | -18.56% | +6.70% | -28.26% | -48.54% |
| 1929 | -49.40% | +52.16% | -30.11% | +19.00% | -83.59% | -89.49% |
| 2008 | -18.05% | +12.91% | -17.58% | +9.60% | -45.48% | -54.43% |
| 2022 | -22.44% | +21.11% | ? | ? | ? | ? |
| (1907+2008) /2 | -22.43% | -18.07% | -36.87% | |||
| Average of three prev | -64.15% |
If we are expecting a banking crisis this year then the overall markets should drop greater than -45% but less than -64.15% ( average of three crashes). Do remember that the rough industry std is -50% but if I were to pick a random arbitrary number I would pick :
2022-23 overall DJI drop should be = -51.485% ( avg of 1907 and 2008 )
Result :
This pattern will take time to activate. I can attach timestamps to it but I don’t think it would be necessary. All you have to understand is the wave-like price action 12345 and make your own decision on which wave you will trade. I cannot keep helping you guys. It’s about time you learn to catch fish yourself and stop complaining. Positional trading is not everyone’s cup of tea and it requires a lot of patience. Most people don’t have this.
Invalidation :
Every theory must have an invalidation. This is the one for me. What if we go up from here and only to crash later in Oct 2008? ( Hint: Quadruple Witching of March, Sept Low Liquidity attack which Fed still doesn't understand. )
Positions :
People who read my past posts :
"Desmond you are a traitor. Why did you sell off $FAZ etf. We were going to crush banks with you. We trusted you man. How could you do this to us"
Yeah guys I am not interested in crushing banks and hence took profits. I have told you all this before it is my personal vendetta and hence it shouldn't be yours. The question you should be asking is why is SPX short low. Well, folks, I wanted to reduce my position to get a better avg price so that any rallies that may come will be faded using that cash balance. As for bonds yah I sold them to buy more JD, 3x Chinese etf, and some gold miners' stocks. Overall my short position must be in the range of 50-60% now. I haven't calculated it coz I am writing this letter way fast.
P.s. Rumors are circulating around that your trading brokers may go insolvent Ex : Schwab, Robinhood, TD, etc. Now I don't know the full truth about it but I would advise you guys to not go all in with your savings in any broker. When the banking crisis hit you have no idea who is underwater and playing with customers' deposits. Let's just be clear it's just a rumor I heard on Twitter and no way i can prove it.
Important message :
Many new people don't know that I started this portfolio with $100 in Wall Street Newsletter in the hopes I will turn it into $10,000 in no time without using any options. So basically by predicting all bear market rallies with you guys, it grew $430+. I wish I had access to the US options market but I just don't.
Closing thoughts :
No one really knows what is going to happen. If someone really knows what will happen please do comments down below. I really wanna know your theory going up for 2023.
But today i am going to tell you a story and maybe you can draw some lessons from it. So the thing is my sister is at a medical university who paid x amt of money until the completion of her 4yrs. The authorities over there are now telling students to pay an additional same x amt more fees during their final internship phase otherwise they would not receive their medical degree. ( Maybe they are underwater in the financial market as well xD ) The message I wanted to convey to you guys from this story is that fraud, corruption and all sorts of dirty things are going to start happening from this yr. You thought scam comments in Yt, Twitter, and Discord were bad you guys have no idea what's in the store. So be vigilant in making any sort of financial decisions. Everyone out there is there to get you when the real austerity begins. If you haven't experienced the "Legitimate things turning fraud cycle" yourself then you might not be ready for this.
Acknowledgment:
I would be lying if I said I have never watched any finance experts in my life. So I would like to thank some people who have been really helpful with their research in helping me throughout my finance journey.
- Mike Wilson: Thank you for taking one for the team. Without you capitulating this would have not been possible sir. You really are the best tactical trader that I have ever seen on Bloomberg.
- Katie Stockton: Thanks for always shorting SPX above $3900 since Nov 2nd week. Also thanks to your friend Liss. You two are really the best folks to watch on Cnbc.
- Market Makers: Thank you, sir. I learned some advanced technical from you. These DW kind of indicators really helps me a lot when I try to put my macroeconomic research on top of it.
- Inthemoney: Thank you, man. You have taught people like us trading options and I wish I had taken the advice you gave me personally that the market can go sideways. Learned that the hard way. xD
- Maverick of Wall Street: Thank you for staying in the Stagflation camp man. It was really lonely when everyone was talking about disinflation. Even I panicked and had to hedge using bonds and the funny thing is I still do. Your jokes in the morning really make my day.
- All in Podcast & Weekly startups: If you guys haven’t watched it you sure as hell are missing a lot. No words are enough to describe how awesome these podcasts are. Whatever discussion these guys have becomes the talk of the town for next week.
- Block works Macro: The lineup these guys come up with is really mind-blowing. My fav ones have always been Lyn, Joseph, and Howell. The hosts of this show are equally amazing as well.
- Meet Kevin: Regardless of what anyone says he is still the most hardworking guy I have ever seen on Yt. The work ethic Kevin has is simply so hard for anyone to match. If you are looking for a daily macro research topic he is the guy to follow.
- Also thanks to the anonymous experienced investors who always try to give me advice like having a backup plan, invalidation cases, and not catching fish for others
- And thank you to everyone from Reddit and Twitter who has ever traded with me. Without you guys, this journey would not have been so successful. I know season 2 sucked in comparison to season 1 just like any other tv show from its highs. I will definitely try to improve more in next season 3 which releases in 2028 or maybe 2029.
- Last and finally I would like to thank all the Legendary Investors in our space. Without your interviews on YT about finance I would have never learned anything. It's because of you folks that I am always calm and composed while i am investing or trading.
I guess this is how a goodbye feels like. Sayonara Everyone. We will soon meet again in 2028-29.
-x-x-x-x-x-x-x-x-xx-x-x-x-x-x-x-x-x--xx-x-x-x-x-
Post credit :
Phone : **Ringtone** Ueda-san calling
Me : *Picks up. Hello
Ueda: Desmond. There has been a problem here. We need your help ASAP.
Me: Omg what did you guys do?
THE END.
r/wallstreetbets
•
u/nobjos
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Jan 11 '23
DD Inverse Cramer? - I analyzed all 21,653+ buy and sell recommendations made by Jim Cramer in the last 6 years. Here are the results.
Magicians are the most honest people in the world. They tell you they’re gonna fool you, and then they do it – James Randi
Jason Zweig, author of Your Money and Your Brain and editor of Benjamin Graham’s The Intelligent Investor highlighted three ways to make money:
1) Lie to people who want to be lied to, and you’ll get rich.
2) Tell the truth to those who want the truth, and you’ll make a living.
3) Tell the truth to those who want to be lied to and you’ll go broke.
There is a massive audience for No.1 and that’s what you see with the “Top 10 tech stocks to buy now” or “Secret stock picks of billionaires” posts popping up every day on your feeds. People want to believe in the impossible – that they will be able to beat the market by following a financial guru or that riches are just one stock pick away.
During the war in Yugoslavia, two professions were in high demand: soldiers and fortune-tellers. Given that we might be moving into another tough year for the stock market with high inflation, a looming recession, and ever-increasing interest rates, investors will be looking towards these “experts” more than ever to tide them over the rough times. Don’t believe us? Right now, there are more than 1 million paid subscribers to Motley Fools’ stock advisory service and ~20 Million monthly visitors to Jim Cramer’s TheStreet website.
There is an endless supply of stock pickers out there and Jim Cramer is arguably the most famous one! So, it’s only fair that we put his stock picks to the test.
Jack of all trades
An equity research analyst usually covers at most 10-15 companies annually and issues directional calls every quarter. But, Cramer has made an incredible 21,653 stock picks [1] over the past 7 years averaging close to 3,000 calls per year. He was making more than 20 stock picks per episode of his show. We can clearly see the classic bullish bias on the calls made by Cramer with 74% of the picks in the buy/positive mention.
One concerning behavior exhibited by Cramer is how frequently he changes his mind. Consider the case of Netflix. He ended 2021 by stating Netflix is a buy but then changed his tune after just a month. Once again in March, he said that it was a buy and then changed it to a sell rating just 2 weeks later. Consistently following his calls would be a nightmare for even the most seasoned stock trader!
Since Cramer frequently contradicts his own picks, we are only evaluating the short-term performance (up to a month) of his calls [3].
Cramer’s Performance
Surprisingly, if you had followed Cramer’s picks to the T, you would not have lost money. On average his buy recommendations went up by 0.87% after a month and his sell recommendations went down by 0.15%. One possible explanation for the brief outperformance is that Cramer’s Mad Money has more than 200K viewers – even if 1% decide to act on his stock tip, it’s big enough to move small stocks. This phenomenon is well-studied and is known as the Cramer Bounce.
In January 2009, graduate students from the University of Pennsylvania published a study claiming that over time, the average next-day increase for a stock that Cramer recommended was 3% for the entire study sample, and almost 7% for smaller cap stocks.They proved through the use of electronic communication networks (ECN) that most trades came in after 7 p.m. ET, when "Mad Money" concluded.
While his standalone performance looks good, it’s a completely different story if you pit him against the market (S&P 500). Except for the 1-day buy recommendations, you would have gotten a better return just investing in the market every single time. Another fascinating insight is that his performance worsens as we increase the time horizon [4].
Finally, we all know how easy it is to pick winners in a bull market [5] and next to impossible to do the same in a bear market. There was so much money flowing in the system that monkeys and goldfish were beating the market and we were trading images of rocks for actual houses. But, the party came to an end in 2022 with the Fed raising their interest rates at the fastest pace in recent history. So how did Cramer perform in 2022 [6]?
All his buy and positive mentions lost money across all time periods! His buy recommendations on average went down 3% in just one month and positive mentions were down 5%. To add salt to the wound, if you had invested in the market instead of Cramer’s calls, you would have scraped by with a ~1% return!
The best & worst calls by Cramer
Even a monkey throwing darts at a chart will be able to pick some successful plays. Cramer has made more than 20K calls and some are bound to work out incredibly well. Here are the top 5 best buy and sell calls made by Cramer. Two of the picks that stand out are the buy rating given to Moderna during the vaccine rally in Jul ’21 and the sell call for the Norwegian Cruise line just before they closed the cruise ships due to Covid. He timed both of them to perfection – We’ve got to give credit where credit is due!
On the other side of the coin, Cramer issued a buy rating to EPR properties & Toll Brothers just before the Covid crash. Both stocks tanked more than 70% in just over a month. During the same time, his worst sell recommendations (Sunrun and Novovax) ended up doubling in just under a month!
His picks were so bad that there are now accounts that track his calls and even an Inverse Cramer ETF that aims to provide investment results by doing the opposite of Cramer’s investment advice.
Heads I win, tails you lose
Show me the incentive and I’ll show you the outcome: Charlie Munger
In the end, we believe that all of us give undue importance to stock-picking influencers – We should all see Cramer for what he is – an entertainer. He does not care about the performance of his stock picks because that’s not how he makes his money. He makes his living by entertaining his audience week after week. His only job is to have a strong opinion – and he does that well.
The final nail in the coffin is how Cramer’s own portfolio has performed. He claimed to have a "rate of return of 24% after all fees for 15 years" for his hedge fund until he retired, but his performance was never independently verified. For the portfolio for which the performance was publicly available, researchers at Wharton found that
Both since inception of the portfolio and since the start of “Mad Money” in 2005, Cramer’s portfolio has underperformed the S&P 500 total return index
I guess that just about sums up everything I had to say!
Data used in the analysis: here
Footnotes
[2] Data is obtained from the Mad Money website & Quiver Quant. We then adjusted for US stocks that are currently trading.
[3] For those who are interested to know how the returns are calculated
- 1-day returns are based on the difference between closing and opening price the day after Cramer made his prediction
- 1-week and 1-month returns are calculated using the adjusted closing price
- Returns are capped at the 99th Percentile so that a few outliers don’t skew the trend
[4] Which were once again validated by external studies
This abnormal increase lasts for only about 12 days, whereupon the stock's price retreats back to its pre-recommended price, assuming no other news has been released
[5] 2016 to 2021 was predominantly a bull market with only the brief Covid drop in between.
[6] Cramer’s website stopped updating the stock picks after Jul’22. We had to scrape the rest of the data and cannot be certain that we are capturing 100% of his picks. But, the sample size of 1,456 picks that he made in 2022 should be more than enough to give the analysis statistical significance.
Disclaimer: I am not a financial advisor. Please do your own research before investing.
r/wallstreetbets • u/joinyellowbrick • 10d ago
DD Which Bank Insiders are Buying their Own Stock After the Crash?
I found 66 banks (or similar) where insiders are purchasing the stock after the crash.
Here are the most interesting ones I found (above $500M mkt cap because WSB blocks posts below that). It includes the price the insiders paid, the current price, the stock’s returns over the last month, and how much the insiders bought (roughly ordered by how interesting they are - in my opinion).
*note: the prices are the closing price yesterday.
SCHW
Purchase Price: $59.31
Current Price: $59.55 (+1%)
Last Month (returns for the stock): -26%
7 insiders (including President, CFO, and CEO) bought $6.82M
VLY
Purchase Price: $9.72
Current Price: $9.81 (+1%)
Last Month: -21%
12 insiders (including CEO) bought $2.8M
PACW
Purchase Price: $15.25
Current Price: $11.37 (-25%)
Last Month: -59%
11 insiders (including CEO and President) bought $1.84M
CFR
Purchase Price: $108.28
Current Price: $107.04 (-1%)
Last Month: -18%
5 insiders bought $2M total (CEO bought $1M)
STEL
Purchase Price: $26.94
Current Price: $26.36 (-2%)
Last Month: -11%
2 directors bought $1.27M
SF
Purchase Price: $59.00
Current Price: $55.93 (-5%)
Last Month: -16%
CEO bought $1.16M
AAT
Purchase Price: $19.29
Current Price: $18.82 (-2%)
Last Month: -29%
CEO bought $1.07M
BRKL
Purchase Price: $11.59
Current Price: $10.97 (-5%)
Last Month: -18%
Director bought $679k
WTFC
Purchase Price: $73.31
Current Price: $71.38 (-3%)
Last Month: -22%
Director bought $520k
TFC
Purchase Price: $38.08
Current Price: $32.10 (-17%)
Last Month: -33%
1 director bought $500k
EWBC
Purchase Price: $49.51
Current Price: $56.72 (+15%)
Last Month: -27%
CFO bought $500k
OBNK
Purchase Price: $34.29
Current Price: $34.73 (+1%)
Last Month: -12%
2 directors bought $500k
TRST
Purchase Price: $34.05
Current Price: $33.11 (-3%)
Last Month: -7%
5 insiders bought $228k
UMBF
Purchase Price: $64.06
Current Price: $64.50 (+1%)
Last Month: -29%
3 Directors bought $304k
GBCI
Purchase Price: $40.21
Current Price: $40.87 (+1%)
Last Month: -13%
CEO, CFO, and Chairman bought $398k
SFBS
Purchase Price: $56.14
Current Price: $57.26 (+2%)
Last Month: -22%
Director bought $280k total
r/wallstreetbets • u/DaddyDersch • 19d ago
DD Day one of jpow: The day of the bear… 3-7-23 SPY/ ES Futures Daily Market Analysis
Well if you were around at 10am this morning you got to watch and impressive $4 drop on a single 5minute candle. Now that is hella impressive. Our tweet by Nick below explains why.
Now if you remember from my TA last night this has all played out from a supply/ demand standpoint beautifully!
Lets review what JPOW had to say today…
Now lets take at the 50bps rate hike change… from a 32% chance at open to 69% chance as of 325pm today…
So what does this mean?
I see two real scenarios that are about to happen in the markets…
First scenario is that SPY is going to drop into CPI (next Tuesday the 14th) most likely targeting 390 support test -> CPI comes in good (better than expected) -> market absolutely rallies into FOMC. (most probable).
The second scenario is that markets realize they over reacted and we base/ hold 400+ into CPI -> CPI beats -> rally into FOMC.
I am bullish on CPI and I think that it is going to show that a 50bps is not warranted yet. I believe what is happening is that the market is setting us up for a MASSIVE green CPI day. I am still waiting for official CPI consensus but as of now it looks really good for a beat (bullish). That CPI beat is going to dump the probability of a 50bps a lot and we are going to see a massive rally.
FOMC when they confirm 25bps will be well received, however, the dot plot coming out is going to be nasty and markets much like December are going to dump heavily.
As you can see we still have a DOOZY of data the rest of the week… I expect some 1% +/- opens over the next few days depending on what data does… going to be a real volatile week as we head into CPI next week.
SPY SUPPLY AND DEMAND
Today played out absolutely beautifully. We have that perfect evening doji star pattern that as I suspected would establish a new supply at 405.2. We not have a new supply put in short of the previous supplies (resistance) at 414-417. With this new resistance/ supply put in here we should look to take out lower supply at 396.46 before we push higher.
As I said before we do not want to leave a supply down below before we push higher.
IF this sell off continues tomorrow if we reach that 394.7 to 396.5 range tomorrow we are going to come into some pretty hefty support. However, if we happen to lose 394.7 demand (support) tomorrow or really any day this week) then that would 100% set us up for a push lower back to 388.52 demand (support) that I was targeting before last weeks $12 rally.
SPY DAILY PRICE ACTION
Taking a look at SPY daily here you can see we are still in this bigger blue breakout triangle here. With this new supply (resistance) being established today it perfectly correlates with our 405.3 channel resistance that has been a long standing pivot level on SPY.
I frustratingly but conservatively did not take that 31dte put swing overnight. However, the risk of this going the other way today was there.
Taking a look at the daily here the biggest thing to note is that we have no closed back below the daily 8, 20, 50 and 200ema. The last support remains at the 100ema which is hovering just over that 396.4 supply I mentioned before that was a target. The 100ema sits at 397 for tomorrow.
Tomorrow we have data before market open and we have JOLTS at 10am (data) when JPOW once again will start testifying to congress. There is a lot of unknown. On one hand what possibly could jpow say tomorrow or be asked tomorrow that could actually reverse this or make it sell of further? Not much in my opinion.
The biggest bear case is that the markets have not (with only one day) fully priced in a 50bps hike. So some more downside should be warranted. The other oddity is that for how reactive SPY was to that drop today the VIX was very underwhelming. Which shows people don’t fully believe it yet…
I think as the data comes in this week with more big data Thursday and Friday we will have a very volatile EOW. I don’t think going long here is worth it for puts or calls. I do favor 390 before we retest 405 again, however, with so much data and JPOW anyone predicting this is just guessing.
I still remain under the consensus that regardless of what happens before CPI… that CPI print (unless consensus comes in hot af compared to Bloomberg/ Cleveland fed) will be very bullish and when markets (algos) see that the CPI DID come down and that its IS lowering compared to last CPI/ CORE YoY that the chances of a 50bps hike are gonna dump for whatever they are at back to non-existent.
While there is always a chance that JPOW drops a 50bps bomb on the market… in all reality the chances of it is very slim. While inflation is not going to go straight to 2% easily and it will rebound (meaning YoY will come in OVER previous YoY) but I do not think it is going to be this CPI print as of now.
However, when the FOMC meetings DOT PLOT comes out on March 22nd that is going to be very spicy…
SPY Levels:
Supply- 405.17 -> 396.46 -> 383.82
Demand- 394.68 -> 388.52
Daily Support- 398.2 -> 396.4 -> 394.6 -> 392.6
Daily Resistance- 399.6 -> 401.5 -> 404.5
FUTURES SUPPLY AND DEMAND
Futures had a beautiful pattern today too with supply/ demand playing out perfectly. As I had mentioned we were looking for that 4055 new supply (resistance) to be established and we officially got that today. Not only that though we came down perfectly to take out previous 4015 and 3991 supplies from the last 2 weeks.
With 3991 and 4015 out of the weigh this opens up a push lower to 3960 and 3920 demand. My ultimate target for downside remains 3920. However, if we get a bounce tomorrow and markets decide to rally into CPI then I would be looking for 4096.
FUTURES DAILY PRICE ACTION
Taking a look at the daily chart here on futures we are just chopping inside of this red channel that stretches from 3920 to 4095.
With a breakdown last week to 3925 -> recovery to 4082 yesterday -> pattern would suggest a breakdown to minimally 3920. This would be a classic 123 rollercoaster as I have talked about so many times.
Futures today unlike spy closed below its daily 8, 20, 50, 100 and 200ema. However, it is currently sitting directly on the 100ema. We did bounce direction off the support from Friday at 3983 today too. There is always a scenario where we get a massive double bottom after a drop like this.
If we were to backtest resistance my targets would be 4020 and 4055.
Futures levels:
Supply- 4054 -> 4160
Demand- 3960 -> 3920
Daily support- 3990 -> 3983 -> 3955 -> 3945 -> 3920
Daily resistance- 4020 -> 4053
DAILY TRADING LOG
Overall despite today being a highly volatile fed day and that massive $4 dump instantly at 10am I had a pretty good day trading.
I unfortunately found myself in one of my level to level calls. I did not know jpow had a pre-released statement or I would have exited my calls before 10am. I did not expect a -$4 candle but it is what it is. Got a terrible fill on my stop loss too.
Outside of that was a pretty great day of trading. I did take some long puts (30dte) in the morning and set a 10% stop loss and was a victim of that rogue $2 green candle at 1215pm. I am pretty bitter about that as I went longer dte on purpose and I would have ended up with a nice 15-20% win. It is what it is but that is my only gripe from today. Otherwise shaping up to be a nice week of trading so far!
r/wallstreetbets • u/mrmrmrj • 6d ago
DD Some quick math on FRC
I have no idea if FRC is going to make it. While the depositors will be ok, that is a very different question from the stockholders.
FRC has a $2 billion market cap right now with 186 million shares outstanding. The current WSJ articles suggest that the $30 billion of deposits injected by other banks could be converted to "a capital infusion". This likely means an EQUITY infusion. How would that work?
If the current 186 million shares are worth $2 billion, the dilution would be massive. Let's assume that $30 billion is "invested" at the current price of $12. FRC would issue 2.5 BILLION SHARES. The highest market cap the company ever saw was roughly $40 billion. Pro forma for the new shares, that would translate into a stock price of $15 (40 / (2.5+.186)).
To be clear, the multi year best case upside for this bank if this is the structure of the rescue is $15. Assets have plummeted and the bank's reputation is in ruins so where would it trade? Much lower.
I think it is extremely unlikely that such a deal even prices at $12 as that would be a bad investment for JPM and the other vulture banks. If the rescue price is $6, then we are looking at 5 BILLION SHARES and the pro forma "upside" becomes (40 / (5.186)) = $7.70 per share.
There is no reason to play in this battleground. The upside is going to the rescuers, not the shareholders.