There Are Treasuries, Then There Are Treasuries
Why It's Still Dip Buy Mode, The Widowmaker Short, and 4 Trade Setups.
I guess it’s safe to get back into the pool. All it took was US airstrikes.
The S&P futures market hit a reflex low on Sunday night, June 22nd. This was when crude was spiking and markets were spooked about retaliation and the Strait of Hormuz being shut down.
China wasn’t a fan of that, because it would cause a localized energy crisis, as Hormuz is how they get their oil.
We’re now 5% up from those levels, with what felt like forced buy-ins on megacap stocks.
Crashes Don’t Happen At All Time Highs
When I get too clever about the markets, I get kicked in the teeth. Sometimes I learn a lesson. And I’ve discovered that I am always too eager to fade a market rally like this.
Headline risk is still stuck around. Remember the Tariff Tantrum? That went to the wayside after the Trump administration agreed to a 90 day pause. That’s set to expire on July 9th.
I don’t know how that’s going to shake out, but with Financial Media focused on the Big Beautiful Bill, there’s hidden risk as we head into that deadline.
Yet the risk is still priced in fairly.
This chart is the implied volatility (blue) against the actual volatility (pink) in the S&P 500.
We’ve got risk pricing in at 17%, while the market is trading close to a single digit vol. If everyone is watching for the exits and trying to reduce downside risk… then that risk doesn’t show up until all those hedges have burned off.
Index shorts are a tough trade, but we are starting to see some high-beta names pull in.
Don’t Stand On The Rug When It Gets Pulled
This isn’t 2021, we are seeing solid resets. HOOD just took a dive, COIN had downside followthrough today. PLTR and CRCL and CRWV are making late longs pay with crushing cascades lower.
Yet none of these moves hold a candle to what we are seeing in DegenLand.
Speculating on Treasure Vaults
The latest squeeze was in BMNR. This is a crypto company that just announced a $250MM private placement, where the proceeds are used to build an Ethereum treasury.
Take a step back… this is incredible. We’re seeing the rapid merging of TradFi and DeFi, and everyone wants a piece.
And in the case of BMNR, the total float of the company is under 2 million shares, so all of this water is trying to push through a small hose.
The interesting play with ETH is that there’s not a pure ceiling while BTC has a mathematically fixed amount of supply. ETH also allows staking, which is kinda like collecting a dividend in exchange for providing liquidity. That means their ETH Treasury could have better outcomes due to staking.
This is going to end poorly for late traders, yet this is another gentle reminder that if you’re an investor or trader in traditional equities, you need to embrace your crypto-bro side.
Trade Setups
WeBull (BULL)
Proxy runner as HOOD went hot. Decent PA and volume is picking up. Look for AVWAP and resistance at 17.
I think the momentum could stick, but there’s one idea I’m seeing short term:
If we get some more risk off action in HOOD, that could cause a stop loss run back under $12. A cross under and a fast retake would be a great entry to reclaim the trend.
Rocket Mortgage (RKT)
This has a rates tailwind if the Fed hints at cutting. $14.50 has been a long term pivot level with only one push above. A ton of volume is coming into this one, and if $15 clears then you’ve got a ton of owners that are in the green and don’t feel like selling until $20.
The Aug $20 Calls are Cheap. Going for about 0.20 and a 12 delta. That’s underpriced. This is a full risk, sell half at double kind of trade structure.
Bakkt (BKKT)
This is one of my “crypto-bridge” sleeper trades. Just had a reverse split and a clean technical level at 15.60.
This company is a Crypto play, with institutional customers for their exchanges. 55% of it is owned by ICE, which runs the NYSE.
Lots of value to unlock here, and squeeze potential due to the reverse split.
Unity (U)
Long term base is being built, and the stock recently held onto its longer term point of control, and hasn’t completely fallen apart after testing $27.
This is an AI layer play. They're in game development, and they now have an AI software that is in Beta this month. If any good news comes out of the reviews, it’s going to moon.