the sell-off continues for the Russell
this just put a new low in relative to last week's run where everybody was so convinced that the Russell is the only place to be all these bobbleheads on TV talking about you have to own them the rotation of the rotation. I just see people rotating out of the Russell because of the very quick short spike in the index.
you need to have 150 to 200 basis points reduction in interest rates in order for that to translate into any type of games to the e as in PE for small caps they need to refinance debt at lower rates and a half point cut in September will translate into zero refinancing of debt there's no benefit to them just like if you're a homeowner you don't run to the bank when there's a half point reduction you need 150 to 200 we went up 500 basis points. so we're talking a year out in the future from September before we get to that 150-200 ideally do you think the market's going to wait around for these companies to miss earnings and reward them I don't
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35+ yrs in the trenches, raised tens of millions for start ups, syndicate ipo's, yrs on trading desk mkt maker.
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10baggerbamm OP : Tom Lee was just on he's saying a 40% increase in the Russell by the end of the summer so I believe what Tom Lee says most of the time if you believe him on this trade then you need to be buying TNA here at $43.81 because a 40% increase on the Russell would put this basket of stocks at over $120
so buying a January 60 call for about $3.25 would be the trade.
10baggerbamm OP : I just bought the January 60 calls. again I'm not 100% sold on this rotation I'm really not I listed my viewpoint because you need to have rate cuts of 150 basis points to 200 before the small caps realize any benefit on their books from refinancing their debt. that being said I believe in Tom Lee I believe there's a lot of people that are smarter than myself and he is one so I bought 50 contracts.. the January 60 calls 2025.. so let's see what happens.