Big Tech Is A Lie

The Nasdaq ripped 2% today, and Broadcom (AVGO) surged 5%. It looks like a bull market. It is not.

The S&P 500 is flat on the week. Today’s move just recovered Tuesday’s losses.

Meanwhile, the advance/decline line dropped all session. 85 out of 100 S&P 100 names opened higher this morning. By the close, breadth had deteriorated the entire day while a handful of tech stocks carried the index. That divergence matters.

Here is what actually concerns me heading into Thursday and Friday. 

Video Length: 00:11:10

The S&P 500 has a $111 expected move this week. We have used almost none of it. Every 0DTE contract from Monday rolled into Tuesday, Tuesday rolled into Wednesday, and now hundreds of thousands of contracts are stacked on the same strikes at 5,271.25. 

When the market sits still, gamma risk accumulates. Thursday and Friday, that risk gets released.

Here is what I walked through in tonight’s video:

• The XLF short put I’ve been holding expires Friday and is already up over 120%. I am riding it.

• Utilities (XLU) are getting crushed, now outside the lower edge of the expected move. Two weeks ago, XLU was one of the top-performing sectors in the S&P 500.

• Homebuilders (XHB) caught a bid when the market rallied and are already fading again. I view that as low-hanging fruit on the bearish side.

• I just closed profitable bearish trades in XLU and Home Depot (HD). The rotation out of defensive sectors is real, and it continues.

Big tech is holding the index hostage while everything else defects. 

I am not chasing Apple (AAPL) or Nvidia (NVDA) into earnings with this kind of gamma risk building. I am staying in spreads, fading the sectors that are already rolling over, and waiting for Thursday and Friday to deliver the move this week that has been setting up.