Don here...
Blake Young just flagged a stat that stopped me cold. Roughly 60% of Klarna's buy now, pay later volume is being used to buy groceries. When consumers are financing their food, the financial companies holding that debt are in trouble.
Meanwhile, the S&P 500 has been stuck in a range all month. Volume is getting lighter. Even NVIDIA's earnings couldn't break it free.
Gold is telling the same story. Average daily volume has collapsed from 318,000 contracts to roughly 70,000. Nobody is committing to a direction.
Blake sees this stalemate as a setup. He is shorting consumer finance stocks and going long discount retailers. The logic is straightforward. Stretched consumers default on loans, and those same consumers trade down to cheaper stores.
In tonight's video, Blake walks through specific setups on both sides of that trade:
-
Wells Fargo is showing a subdued bounce after its selloff, and Blake outlined a March 90/83 put spread for $3.25 on a $7 wide with 72% probability of profit and positive time decay.
-
Capital One Financial needs a close below $207 to trigger a quick 8 to 10% drop to $193.
-
TJX just touched a 52 week high after shaking off earnings volatility, and Blake detailed a 155/160 call spread with a 45% probability of max gain.
-
Dollar General and Ross Stores continue climbing to new highs even while the broad market sells off.
Blake's thesis could define the next quarter. Short the lenders holding consumer debt. Go long the discount stores collecting consumer dollars.
Click here to watch Blake break down each trade setup and the levels he is watching
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
No comments:
Post a Comment