The S&P 500 just closed its ninth straight week in the green. One stock is doing almost all of the work. Strip out Nvidia (NVDA) and the rally barely exists.
Brandon Chapman pulled up the weekly chart in tonight’s video. Almost everything underneath the index is bleeding.
Nvidia ran nearly 6% on news of a Microsoft (MSFT) partnership to build an AI powered desktop PC. That single move dragged the entire tape into the green.
Utilities got slammed on the very same day.
Brandon calls this the one way trade. Money is buying Nvidia calls and selling S&P 500 options.
The result is a thin rally with almost no participation underneath it.
Here is what Brandon flagged in tonight’s video:
Most S&P 500 stocks are sitting below their 5, 20, 50, 100, and 200 day moving averages, or 50/50 at best. Breadth is deteriorating day by day.
The SKEW index jumped to 144 with the VIX down at 16. Tail risk is building as traders pull back on hedging.
Gamma is pinning price at 756 with the call wall at 760. A break of 750 cracks open the downside.
Institutions are rotating back into energy. Block trades bought nearly 20,000 XLE call contracts at the 63 and 65 strikes for late June and July.
The consumer is the crack underneath it all. Walmart (WMT) fell hard after earnings while Visa (V) and Mastercard (MA) keep fading.
Brandon is trading the tape that exists. He hunts pockets of strength and sells into it. He booked a 50% intraday gain on a long S&P trade today.
Energy is where he sees real structure. Oil futures are in backwardation and the curve is pricing in shortages.
He says a move back toward 110 is not unreasonable if the Persian Gulf situation drags on.
His message for the week is direct. Take profits at your targets. Build a bigger cash position before the breadth finally gives way.
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