Zaki Capital

Tag: markets

  • Market whipsaw – June & July

    June and beginning of July is having large moves in both directions. Let’s see if July & August will bring in a large drawdown – likely on the back of middle east war.

    Saving some price action for future reference.

    Note the bottom around 10.40am mark, another higher low at 11.40am before a good rally, only to come down again to retest later in the session.

    Double top from the pre-market and then elevator down.

    The 5 min chart puts things in better perspective:

    30 min chart, note the lower highs and the base holding so far, could likely crack in July/August, but first another rally perhaps:

    Zooming out on 4h: massive rally since April when Iran war ceasefire came into effect, then top out around 3 June, good size down & up moves since then with lower highs and bottom base.

  • Social media ceasefire, VIX and portfolio

    Some social media posts can meaningfully move the markets, especially when the president of USA publishes a potential ceasefire post. Here’s how the Qs (QQQ) moved on a 1 min time-frame, it was about a +3.5% spike. Most of the move materialized in just 5 price bars of 1-min.

    Same QQQ chart over a 5min time-frame. Nice flagging pattern (digestion) after a large up move.

    Prior to the ceasefire post, the markets had gapped down overnight with the VIX hitting 30 on its second spike (first major spike on 9 March overnight with a high of 35, chart below). Reacting to the presidential post, VIX made an intraday low of about 20 (a -32% move) before reversing again in search of some equilibrium in this epic madness.

    Given this context of market volatility, the portfolio I manage has remained rather resilient, clocking new YTD highs in equity value (up +7% YTD vs -4.8% QQQ).

    Why is that so? Some observations:

    • Small position size of mainly short puts (high IV helps harvesting of fat option premiums), max commitment of about 50% portfolio cash.
    • Low delta strike selection with weekly or 2 week expirations.
    • Sold stocks (assigned last Friday) in pre-market after the “ceasefire” news broke out, booking tactical gains. This can be attributed to luck.
    • Shorting puts on intraday lows and taking profits on up swings (range bound/flagging market). Tiny day trades on TQQQ.