Punk Rock Weekly

Our Trade on Nvidia Earnings

Down Week in Markets Likely To Be Reversed by Strong Earnings Next Week

Markets saw their first down week in six, led by losses in Materials, while Consumer Discretionary stayed positive. Volatility remains elevated, with the $VIX above $20 as big tech earnings approach. At Punk Rock Traders, we’re maintaining a long volatility position to hedge against potential market swings, capitalizing on the strong U.S. economy and strategic options trades.

Informed Optimism Should Be Your Starting Place in Markets

Despite widespread pessimism, markets are performing exceptionally well, as seen with the S&P 500 nearing record highs and strong earnings reports from key companies. We believe that the current pessimistic sentiment is a signal of early bull market stages, offering valuable opportunities. Our informed optimism, coupled with sound analysis and leverage, has produced stellar results, such as our recent Trade of the Week on Taiwan Semiconductor ($TSM), which gained 200% in under a month. Don’t let fear cloud your judgment—embrace the opportunities ahead.

Strong US Economy Gives the Equity Market Good Footing Into Holidays

Markets hit new all-time highs despite a hot CPI report and rising jobless claims. The Volatility Index remains elevated but is expected to drop post-election. Strong economic fundamentals, a resilient labor market, and solid earnings point to continued bullish momentum. With the holiday season approaching, investors should prepare for more market strength, looking beyond short-term geopolitical concerns.

Let’s Short Oil

The nonfarm payrolls report revealed a stronger-than-expected US economy, adding 254,000 jobs in September. Service sectors like Leisure and Hospitality showed resilience, while inflation fears and rising oil prices due to Middle East tensions raised concerns. Despite this, equity markets rallied, showing confidence. With oil prices likely overreacting to geopolitical risks, shorting oil could be a smart contrarian trade.

If You Mess With a Bull Market, You’ll Get The Horns

Markets showed strong fundamentals this week despite mixed sector performance. The Fed’s preferred inflation measure, PCE, came in lighter than expected, paving the way for rate cuts. Semiconductor stocks rallied, and the VIX stayed low, benefiting short-term volatility trades. With upward GDP revisions and resilient consumer savings, this mid-cycle bull market looks strong, even with some election-related volatility ahead.

Risk-On Week Suggests Markets on Strong Footing

Markets rallied this week as Powell’s 50 bps cut boosted bullish sentiment. The Dow hit an all-time high, and despite possible October volatility, strong fundamentals point to a positive Q4. At Punk Rock Traders, we focus on short-term opportunities while staying bullish long-term. Don’t fear the dips—capitalize on them and ride the bull market.

Wealth Augmentation Vs. Wealth Preservation

Investment is high-stakes, like gambling. At Punk Rock Traders, we embrace risk with high-return options trades. With markets at new highs and recent volatility, our strategies use both long-term LEAPS and short-term derivatives to capture opportunities.

Jobs Report Comes in Soft, But Not Recession Soft

The latest jobs report shows continued labor market strength with unemployment at 4.2% and 142,000 jobs added in August. Despite a slight miss in job expectations, the report supports a potential 25 bps rate cut and indicates a stable economic outlook rather than imminent recession.

Nvidia Will Beat Earnings Expectations Today

Nvidia’s dominance in AI and computing is driving substantial price gains, even as it appears overvalued. Despite this, the company’s fundamentals justify its rise, and recent earnings reports highlight its ongoing strength. Nvidia’s stock, which recently rebounded sharply, shows a favorable risk/reward outlook as it continues to surpass Wall Street expectations. Our recent trade, capitalizing on this momentum, is up 125% and indicates potential for sustained growth. As the Fed’s cutting cycle begins, Nvidia’s valuation may become even more attractive.