The Force Awakens.

Stocks ended Thursday mixed, something we have grown used to in 2021.  2021 has been a daily war of between Growth and Value.  Risk off-risk on, opening-closing, inflation-unemployment.  But behind the scenes the driving force behind the moves has been US Government Bonds.  And its been simple, rates going up is good for Banks and more broadly Value stocks.  Rates going down are good for Tech and Growth stocks.  So yesterday when Tech got hammered and banks did well, on a day where yields fell, is a major disturbance in the force, something to take notice of going forward.

The result is the same for VIX traders, a mixed market lowers volatility. And yes while the force has been disturbed, this is not an Alderaan destruction event.  The market will trod along fine as long as the markets remain mixed.  Traders fear markets moving the same direction.  That is when Volatility takes over.

All that said we should take note that at least for one day the psychology around Bond Yields flipped.  It went from bad news on the economy is good news for growth prospects to bad news on the economy is bad news for equities.  Something to watch to see if this force grows into something more dangerous.


(9) The Correlation of the 10-Year Yield and Nasdaq-100, as Well as Volatility Trends – YouTube

PTON Bear Put Spread

I was on TDAmeritrade Network on Wednesday laying out a potential trade to the downside in the over valued stay at home stock.  I do not give financial advice, this is only for educational value.  But you are all welcome for the fantastic education I gave.  But this is how to line up a trade when you want a direction.  If a part of the vol curve is expensive that is where you sell.   That is the mindset of an options market maker.

Morning Trade: Peloton (PTON) | Morning Trade Live| TD Ameritrade Network