This Trading Week Is Turning Into A Wash
The Southeastern United States is about to experience its first round of “fake fall.”
It won’t be 90° in the shade, it will drop down to an incredible 87°. Humidity will be down, nights will be cooler, and its just in time for college football kickoff at the end of the week.
New York seems to be having a similar mood. Temps and humidity dropping, and Labor Day is just around the corner.
I can’t predict the weather. But I can predict that a LOT of market participants are going to be feeling like this:
Contrary to what twitter says, the market is not always full of high-octane hustlers popping addy and trading into the close before a three day weekend.
Sometimes, Wall Street slacks off.
We’ve already reached peak narrative with the inflation trade. The Fed showed its cards at Jackson Hole, another round of hedgers came in to help keep a bid on market risk.
Unless something really hits with NVDA earnings on Wednesday, don’t be surprised when the Hamptons effect starts to hit the markets.
There could be an interesting trade where you go long the 28Aug straddle and short the 4Sep strangle:
The idea is that you expect some vol to hit the Nasdaq after NVDA earnings, but after that it’s going to get boring. The trade is best expressed with equity futures for margin and better ability to gamma scalp.
Don’t actually trade this if you’ve never seen the structure. But if you want to follow along, simulate the trade and see how it acts through the NVDA event.
Outside of that…
There will be a few small cap trades that will provide monster edges in low liquidity environments, but if you just learned that from reading this sentence, it’s best you avoid those and go spend time with your family.
I’ll still be here in the trenches, but that’s because the beach is a short walk away.
Crypto Bulls Are Finding Out
DeFi may not be able to take a long weekend.
Bitcoin has built out an incredible sequence.
First, the breakout.
Then, the retest (1).
Then, the failed breakout (2).
Then, the “double bottom” (3).
That level was taken out today. There was some kind of a liquidity pull in crypto land on Sunday, with a whale pulling $2.7B out of crypto.
This has left BTC with a full month of bagholders, some with too much leverage, and they’re getting stopped out.
I think it’s a dip to buy. You have the swing AVWAP from the April lows coming up, as well as a volume shelf in the 106-107 range. Don’t expect new highs soon, but if you want to take a shot at some IBIT put sales, it’s a decent trade.
DJ Basin Depression Leads To A Solid Setup In This Oil Name
Next to Occidental (OXY), Civitas (CIVI) is the largest oil play in the DJ basin. It’s had a rough few years. You’ve got regulatory risks for operating in Colorado, cuts on production targets, and a soft oil market.
Yet it’s been holding up. There’s probably some “deep value” capital being allocated in the name, and it’s worth a look if you' want to scoop up a 5.80% yield.