The way media and analysis react after a couple of down days always reminds me of this old clip from Futurama about "Ancient Wall St.":

The "action" today that I expected to see a slight rebound as we bounced off the bottoms a couple times in the previous two days. From a psychological standpoint no expected policy changes mean that a lot of people I believe are heading into the trading session today with some weekend optimism which does tug prices upwards a bit.

The only notable news today was the Michigan survey of consumers which points out the obvious: consumers are getting more scared that Trump is going to wreck the economy.

What is perverse is that some financial professionals view this as positive because they believe the Federal Reserve will step in sooner and lower rates. Despite the Powell saying the economic policy of the White House is going to drive up inflation, it seems many believe that the Federal Reserve is going to blink first.

Last week, Fed Chair Jerome Powell said tariffs could pose problems for inflation-fighting efforts if they caused inflation expectations to rise.

Rising expectations could make it less likely the Fed will cut its key interest rate this year, a top goal for the administration because such cuts could reduce mortgage rates.

The fundamentals of the market haven't actually changed, which is why I am still rather pessimistic on gains made at the end of yesterday and into today. There is still a loose tariff cannon in Washington D.C. I would still call this a bear market, and have difficulty imagining that changing so long as the White House is operating in its current model of protectionist blitzkrieg.

What is also happening is that the White House is already moving the goal posts on their "short term pain, longer term gain" rhetoric. The acerbic Commerce Secretary claimed this week that the gains will not really be realized until Q4, later than the prior rhetoric of "second half".

Commerce Secretary Howard Lutnick, Trump's lead on trade, said the administration won't be fully responsible for the economy until the final three months of 2025, when he expects things will be better.

The beatings will continue until morale improves.

My usual put options strategy becomes much more tempered on days like this. There will be smaller swings but barring any positive or negative news, the main driver of volatility seems to simply be jitters combined with algorithmic trading.

I am pleased to be closing out the week in the green after more conservative and measured trading. There were definitely opportunities where I could have aimed for higher returns, but the week prior I had overleveraged a few trades, misjudged the momentum, and got flogged for it.

Next week the drama will continue. Will there be new surprise tariffs? Will we see peace in Ukraine? Are we in a recession?

Who knows!

Log

• I woke up expecting volatility and a bounce back since we have now seen a couple down days in a row. I also figured everybody would want to have a green day before the weekend.
• Scanning the news didn't show me anything really interesting, more details about the new CEO at Intel (INTC), commentary about Musk and Tesla (TLSA), some hand-wringing about the potential for a government shutdown but nothing that I was expecting to move the markets in a dramatic way.
• I did notice a couple of analysts release mixed changes of AMD's rating, so I was expecting some movement at the open there.
• I queued up a number of buys of covered calls if prices hit what I wanted. Basically setting a low mark where I would be happy to close the covered call options and take profit.
• Also queued up some options plays I expected to see some action.
• Guessed wrong on a pop-and-deflate for AMD and danced with the devil by buying more put options to dilute the price. There was a quick dive probably driven by HFT which put the options "in the money" and let me close them out profitably. Saved myself from a stupid trade, whew!
• Found some spikes up and momentum on both Tesla (TLSA) and SMCI which played out well.
• Sold my covered calls and closed the terminal on a high note.