Making lemonade out of lemons is such a great way to approach problems. The reason is that it reframes our thinking. We are faced with a problem, instead of wallowing in pity; we pause and ask what can we do to make lemonade (or solve the problem).

With the bank failures this month our economy once again faced a problem. But the great thing about our system is that we look for ways to address it. No problem is welcomed, but they are a fact of existence, therefore it behooves us to develop mental tools to deal.

So once again, we asked ourselves how can we make lemonade here? One idea is to slowly begin to pick up quality banking stocks at discounted prices. Another idea is to embrace the volatility, and sell options premium against it, as seen in the IWM Iron Condor HotTrade below (for premium members).

Best in investing and life,
Greg & Jerry

p.s. Say hi in our discord this week!

Weekly Market Report

There is definitely a change in sentiment this week with the Fed’s balance sheet going back to where it was this past November. Yields are dropping and Bonds, Gold, and even Bitcoin seem to be where the “safety” is. The VIX ended the week over 25, oil had massive moves down, and the inverted yield curve is reverting to the mean.

Indexes and Macro Indicators

S&P 500 & QQQ

While SPY was up over 1.2% for the week, QQQ was the true star of the show, rising over 4% for the week, no doubt helped by MSFT and AAPL.

Weekly Finviz Heat Map

Communication Services and Technology led, while Industrials, Basic Materials, Financials, and Energy lagged.

Bitcoin

Up over 30% this past week Bitcoin zoomed to the moon. OK, perhaps that is an exaggeration, however in March of last year we argued that Bitcoin Failed its First Big Test. With the weakening global financial sectors, did it finally pass its SecondBig Test

Yield Curve & Rates

One of the most interesting developments this past week was the drop in yields, and the steepening of the 2/10 yield curve by over 60 basis points. With rates dropping like stones, seems it could help 30 year mortgage rates, bond prices, and the tech sector. On the flip side, does this mean the Fed will need to raise rates more aggressively or is this the end of QT?

Crude Oil

News from Saudi Arabia, Russia, and Banking Sector are pulling down WTI oil futures to lowest levels in over a year. Trading volume is high as crude demand lessens, and economic weakness gets priced in.

Gold

Freebie for Non Members: Perhaps banking crisis is the catalyst, but GLD was on fire this week. We were able to take off the 170/174 Bullish Vertical Call Debit Spread for a 2.81cr after buying for a 2.00db. This was an $81 profit, 40% ROI for holding a day + 1 weekend. If you still have this open, it will be worth even more! Gold has not been this high since April of 2022.

The VIX

Touching over 30 this week, the VIX has traded in a wide range. (The VIX of the VIX is high!) What’s interesting is that it didn’t mean revert back to below 20, and seems to be holding above 25 after the markets closed on Friday.

Fear and Greed Index

The put call ratio (one of the metrics baked into the Fear and Greed Indicator) declined to 1.04, but is still trading over 1, meaning slightly more traders are buying puts than calls (think “portfolio insurance”).

Hot Trade - IWM Iron Condor

Called out this IWM Hot Trade in discord this week for members.

IWM Iron Condor. On 3/15 I called out in discord a 5 dollar wide Iron Condor in IWM out to MM/DD at the XXX/YYY/ZZZ/AAA strikes (Paid Members Only). As of today, the trade has a 75% chance of making $83.50. Note that some of the small regional banks having balance sheet issues are inside of IWM, that’s why the IVR% is 63. Will any regional banks be cut from the Russell 2000?

Other Trades from This Past Week

• Closed my 170/174 GLD Call Spread for a profit 81$ profit.

• Opened a new covered call in SLV out to April for a $50 credit (21 strike)

• Sold a Cash Secured Put in XLU out to April for $100 (63 strike)

• Closed a Bearish QQQ put spread for -$18 loss

• Entered an XOP iron condor, initially 113/118/147/152 which I’ve had to adjust 2 times due to energy and oil prices falling.

• Did an overnight strangle in SCHW collecting 1.50 on 3/15, then closing the next day for 1.02 ($48 profit).

Earnings Next Week

We will be watching earnings in Nike, GameStop, Chewy, Footlocker, and General Mills.

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