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Don Kaufman here. |
Holy crap! |
The market's short term memory issues are worse than my kids after I tell them to clean their rooms. |
Let's talk about tariffs on a Friday or Saturday so that nobody can possibly remember what happened by Monday. |
That's the administration's strategy, and it's working perfectly. Everyone's sitting there going "Oh, tariffs? That was just weekend noise. Back to buying AI stocks." |
Let me explain something to you. |
August 1st is real. Dead real. |
Why $27 Billion Says I'm Right |
You know what nobody wants to talk about? That $27 billion surplus that came in last month. |
All because of tariffs. The media doesn't pick this up because it was actually positive for the Trump administration. |
But here's the thing - how the hell do you think they're gonna pay for anything right now? |
They need that surplus. This is politics happening right in front of us, and for the next month or two, they're gonna hammer people with big boy tariffs to bring in massive capital. |
The market right now doesn't care about tariffs. |
Why? Because we have AI! |
Don't worry about it. We don't even need anybody else. That's the present thinking. But when August 1st hits, that thinking gets expensive fast. |
The Schizophrenic Market Nobody Wants to Admit |
Here's what should make you nervous: Trillions of dollars in the SPX doesn't know what the hell we're gonna do, neither do you. |
Look at the breaches of expected move. Those are only supposed to happen about 30% of the time. |
Does that look like 30% to you? Hell no. This market is basically an unmedicated schizophrenic at this point. |
Even the professionals can't get the risk right. The market has blinders on - it can't see anything ahead of it. |
And that's exactly why my tariff positioning makes sense while everyone else is chasing AI dreams. |
My EEM Trade (And Why I'm Kicking Myself About Brazil) |
The EEM is heavily Asian influenced - lots of products from China. I think it's gonna roll over because they're gonna stick these sovereignties with tariffs. |
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I'm really pissed off at myself because I saw Brazil coming from a mile away and didn't take the trade. |
Brazil's the number two trading partner - of course they're gonna take a shot at them. That thing dropped 7% in six sessions. A full correction. |
That's exactly what I expect to happen in emerging markets as we get closer to August 1st. |
The EEM trade gives me a month to see if tariff reality finally hits the marketplace. |
I shared the full details of my EEM put spread in my In/Out Service last week. |
The Butterfly Math That's Too Clean to Ignore |
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Now here's the beautiful part. |
Very few times do we go two consecutive weeks without hitting the expected move edges. Last week we missed. This week? Much higher probability. |
The SPX butterfly at 6170 costs 55 cents. That is buying the 6185 put, selling the 6170 (twice), and buying the 6155 put. |
These expire on July 18. |
You don't have to hit many of these. I had butterflies earlier this year go from 40 cents to five dollars. |
You could strike out on ten trades because one winner makes it all worthwhile. |
What I'm Watching Right Now |
Apple hit the upper edge of its range and is rolling back over. Tesla's order flow was all wrong this morning - more calls being sold than bought. That's directly bearish. |
The advanced decline line is getting better, but I think that's rotations out of tech. Won't last. |
As this tariff reality gets closer, tech's gonna have problems while everything else tries to rotate. |
The best advice I can give you: use defined risk. I got ripped up in a QQQ spread, but I don't care. I'll get 'em next month because I was using defined risk. |
I break down my entire risk management system (including how to size these trades properly) in The TheoTrade Live Room each morning . Because getting the direction right is only half the battle. |
Come On, August 1st is Real |
While everyone's focused on earnings and AI dominance, I'm positioning for the one thing nobody wants to remember: August 1st is real. |
The European Union is already reaching out to India because they don't want to negotiate with us. |
There's serious crap going on, but the market's got amnesia. |
ACTION: I bought the SPX 6170 put butterfly for 55 cents, expiring on July 18. |
Position for tariff reality as August 1st deadline approaches. |
To your success, |
Don Kaufman |
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