Key insights
- The author views the current market as a pullback driven by a strong jobs report pricing out rate cuts and the need for liquidity for SpaceX. They anticipate a period of choppiness and potential pullbacks leading up to Micron's earnings and a significant sell-off post-Anthropic's IPO, potentially exacerbated by political events. The author plans to increase cash holdings and hedge with defensive stocks, predicting a second market correction between August and October, typical for midterm years.
I see this as a pullback. Earnings look good, and AI spending doesn’t show any signs of slowing. Institutions needed a reason to pull back, and the jobs report priced out a rate cut (we’ll see, in my mind). The market needed a pullback after running too far, too fast over the last three months. Institutions also needed liquidity to buy into SpaceX.
I foresee SpaceX creating headlines about Elon Musk becoming a trillionaire, only for the stock to be sold off afterward. I expect chop and possibly a pullback leading up to Micron’s earnings on June 24th, which could open the door for a blow-off top heading into Anthropic’s fall IPO.
That’s where I think the market sells off. Something political will likely emerge, and knowing Trump, he won’t pass up an opportunity to manipulate markets. The froth will get scrubbed out, and investors will finally digest what AI means for different businesses, allowing the true winners to emerge afterward.
I currently hold 20% cash and plan on raising that to 30%+ by the end of July. Midterm years typically see two corrections or crashes. We’ve already had the first one, and I predict the second begins sometime between August and October.
I’m all set on shorting/buying put options. It works when done correctly, but it adds too much stress to my life. I’ve learned that hedging with defensive stocks and cash is the better approach for me.