Post-Rebalance, Main Street is Perking Up

BY ANDREW GIOVINAZZI

July 26, 2023

Yo Pit Crazies,

Over the last week, Option Pit has been talking about the Rift. It had the potential to give the Invesco QQQ Trust (Ticker: QQQ) fits, but it ended up staying flat from last week.

The power move in and out generated some noise, but the early news of the rebalance caused too many traders to sell early. Then Microsoft Corp (Ticker: MSFT) squeezed all the shorts because they said “charging more for AI”.

The ideas we had were thanks to Mark. Essentially, we were short QQQ as a hedge and long everything else, especially Dow Jones Industrial Trust (Ticker: DIA) shown below. DIA had a steady run, as QQQ was flat.

QQQ and DIA compare chart with DIA in the green

The pair trade worked well here like we run in Nitro Trader.

Trade for what you think, hedge for what you don’t – even though we made lots of money off the rebalance, it didn’t go exactly as expected.

Opportunity is Not Always Where You think

I thought we would get a 2-3% selloff in QQQ. We didn’t get that much but a couple of decent days. It was enough to make Nitro Trader, Make the Call, Delta Strike, and Win the Week pay for trade ideas. One side went up, the other side stayed flat or dropped, and that’s enough for success.

We booked fifteen winning ideas or more based on the Rift.

Going forward, good earnings and Alphabet Inc (Ticker: GOOGL) jumping will be a VIX crusher. I just have to get over the Fed raising rates tomorrow.

MSFT didn’t dazzle but is hardly down – incredible after a $50 point run in 3 months.

I still expect VIX lows this week and 4600 SPX. That’s what the market wants.