If you are long this market, today hurt.
The Nasdaq is down over 4%, its worst day in over a year. Marvell off 12%, Micron off 11%, Intel and AMD down double digits.
A hot jobs number put rate hikes back on the table, yields broke higher, and the chip names that carried this whole rally are the ones getting annihilated. SanDisk is down 10% and about $300 off its top.
Literally, this thing is crazy. The money that ran this market up is coming out fast.
If you are watching your long-term account bleed today, let me show you what I was doing instead.
Two days ago, the market was at all-time highs and the VIX was sitting at 16.
I bought the SPY July 750/737 put spread for $3.34, and the day before that the same spread for $2.91.
At the time it looked like a waste of money. The market was ripping and nobody wanted insurance.
Today, with the VIX above 20, those spreads are marked at $5.50 and $6.50. I sold into the move this morning while the rest of the market was scrambling.
Here is what let me see it coming.
I spent 15 years as a market maker on the floor of the CBOE. That job is not about predicting the market.
It is about spotting the moments when something is priced wrong, and getting positioned before everyone else figures it out.
You do it ten thousand times until your eye does it on its own.
Two days ago, my eye caught one.
Normally, when stocks go up, the VIX goes down.
That is the fear gauge, and it falls as the market climbs. It has worked that way about 80% of the time for as long as I have been doing this.
But this rally was so steep and so strange that the VIX never came down the way it was supposed to. There was an entire chunk of the fear gauge it simply had not visited in months.
That gap was the tell. It meant protection was mispriced. While the whole market stared at the new highs and called the VIX too high, I saw insurance on sale that almost nobody wanted.
So I bought it, cheap, two days before the floor fell out.
That is the edge.
Not a prediction about today. A trained eye for the moment something is priced wrong, and the discipline to act on it while it still looks like a waste of money. The floor beats that into you. You do not get it out of a book.
Here is what I want you thinking about over the weekend.
I do not think today was a one-off. I am still holding volatility protection into the weekend, and I put it there on purpose.
A jobs number this hot, yields breaking higher, the Fed suddenly back in the conversation, and a market this stretched after a run this steep is not the kind of thing that resolves itself in one afternoon.
Monday could pick up right where today left off. And if my eye is reading this tape right, the next mispricing is already setting up.
I hunt for these every week in my own real-money account, live, while members watch me do it.
The next one goes out this Wednesday, and given what just happened to this market, it might be the most important one I have put on in months.
If you are tired of days like today happening to your account with nothing underneath it, come see how I find them before they pay.
Andrew Giovinazzi