Trade Alert: Whipsaw Market
Buying selectively in a violent tape.
Buying Selectively In A Violent Tape
Market action has remained violent, but today at least the violence is running in the other direction: stocks have rallied sharply on reports that President Trump may be willing to wind down the war even if the Strait of Hormuz is not immediately reopened, along with conciliatory comments out of Iran. That does not mean the danger is gone, but it does suggest that markets are starting to price a possible off-ramp rather than only a worst-case escalation.
That said, our core view hasn’t changed much. We still think this war is more likely to be resolved within the next month or so. Our bullish trades are aimed several months out, with the idea that by the time those options expire, we expect to be on the other side of this conflict. In other words, we are not trading for the next headline—we are trading for where we think this situation is more likely to be by early summer and beyond.
Filtering Out Falling Knives And Overextended Names
Even so, we’re not trying to buy every dip or chase every breakout. We’re still using our RSI (Relative Strength Index) and Chartmill Setup screens to help avoid falling knives. In Monday night’s Top Names, only our #1 name passed those screens—but we’re still not placing a trade on it today. Part of that is because we think its space may still be vulnerable to further pullbacks in this environment, and part of it is because we already have an open trade on it that is currently in the black.
Three Bullish Trades, Carefully Priced
Instead, today we’re placing three bullish trades in names sourced from outside our top names. One is in a large AI semiconductor company, where the stock has sold off enough to set up a cleaner, lower-strike re-entry than the trade we placed there late last year. Another is in a cloud-communications company tied to enterprise software and AI-enabled contact-center workflows. And the third is in a more speculative photonics name that some investors think could eventually become part of the next wave of optical interconnect infrastructure.
In all three cases, we’re being extra careful not to overpay for options structures in this market. That means we’re using bids priced with this tape in mind: either we get filled at prices we like, or we pass. We’re not chasing anything here.
Today’s First Chartmill Trade
AI infrastructure / semiconductor theme
