6/16/23 It’s a Crowded Trade


On Thursday morning, the markets opened slightly red, and for good reason…

  • Overbought conditions persist
  • The Fed came out more hawkish than anticipated—A July rate hike is on the table.
  • Weekly jobless claims suggested the labor market is holding strong

The open ended up being the low point of the day.

The indexes climbed throughout the session and finished sharply higher…

  • Dow Jones +1.3%
  • Nasdaq +1.2% 
  • S&P 500 +1.2%
  • Russell 2000 +0.8% 

So why the gains?

Photo from Getty Images

The most likely reason is short sellers got squeezed.

There were a lot of *reasons* to sell. But the market moves on buyers and sellers—supply and demand. If one side of the trade gets overcrowded, the market will balance out sooner or later.

Thursday’s gains were due to short sellers getting crushed.

Sector Round Up

Every single one of the 11 sectors ended the session higher.

At the top…

  • Communications (XLC) +1.6%
  • Healthcare (XLV) +1.6%
  • Industrials (XLI) +1.5%

At the bottom…

  • Materials (XLB) +0.9%
  • Consumer Discretionary (XLY) +0.7%
  • Real Estate (XLRE) +0.4%


Despite the gains in the market yesterday, the VIX ticked higher…

VIX Daily Candles – Chart by thinkorswim

It’s still holding at historically low values. But a climbing VIX suggests traders were scrambling … that’s more evidence that Thursday gains were driven by a squeeze.

The market remains overbought, but we’re still not willing to short. 

Your latest readout…


Today is the second Triple Witching of the year, when options and futures contracts expire together.

  • With the market currently out of balance, we could see some added volatility, especially late in the session

After the close, markets will remain closed until Tuesday.

  • Monday is the Juneteenth holiday


*Low Float
^Open Position

*CELZ on watch
*UTME support at $2.20, resistance at $2.40
*PPSI support at $7
*^GSIT on watch
UP on watch
INOD support at $10, resistance at $12
AAOI support at $4
SYM support at $45
OPRA support at $19
^PLAB support at $23
CBAT support at $1.30
HEPS support at $1.40
UPST support at $35
^AI support at $45
CVNA support at $20, resistance at $26
NVTS support at $9, resistance at $10
MRNS support at $10

Secondary watchlist—float 100+ million

NEXT on watch
^IOT support at $28
GOL support at $4.50
JOBY on watch
RKLB support at $5.50
SOFI support at $9
^PLTR support at $16
CCL on watch

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