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Coming Clash: Trump vs. Powell! 

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Monday January 27th

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“I remember my grandfather telling me how each of us must live with a full measure of loneliness that is inescapable, and we must not destroy ourselves with our passion to escape the aloneness.”

– Jim Harrison

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Well, if you missed the news, China just released an Ai agent called Deepseek. This is sending the entire tech sector into a deep sell-off. Why? Well, Deepseek is supposedly 1/30th the cost of the other AI models. And it only requires a fraction of the GPUs. So, companies like NVDA, which depend on selling a ton of GPUs to power the AI revolution…or Broadcom…Or SMCI…are in deep trouble. 

SPX gapped down hard, but the plunge protectors did good work getting a big green candle since open:

Honestly, it’s not a bad week to stay out of the markets entirely. After such a large gap down as the one we’ve had today, combined with a strong bullish candle on the daily, it’s really a toss-up where we go from here. Not only that, but we have the next FOMC interest rate decision on Wednesday, GDP and jobless claims on Wednesday, and Core PCE Index on Friday. 

So, it’s a stacked week. Pile onto all that this most recent Deepseek news, and you really have a recipe for chaos. Remember, the markets are basically the big tech stocks — and anything that affects those companies could send markets soaring or falling. 

However, there are some bright spots in the market. Mainly on the consumer defensive side. TGT is looking good right now:

It’s almost triggered a “Buy” signal on my Wave Indicator. 

Then we’ve got WMT, which is also doing well:

I like the 28 FEB 25 $100 CALL options on those. 

Oh and I forgot to mention yet another reason why this week is going to be insane:

Earnings. 

We have some super mega-cap earnings coming in on AAPL, META, MSFT, and TSLA. 

If you want to see how I trade earnings, click here. 

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Testimonial of the day

Dave C.: “I did have a 31.87% gain on the VXX 01/17/25 48.00 Put.”

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To Better Trading, 

Alex Reid