💥AVGO Crash

Daily Market Model Update for 6/3/26

*This one is long, make sure you click through to the site to read it, because your email provider might cut off the bottom of the email and there are some good charts in there at the bottom!*

Welcome to the Daily Report, where I review the day’s market moves and their drivers. I share signals for two portfolios, along with many Special Opportunity trades throughout the year.

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Let’s review what happened today!

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What Drove Today’s Move

Semis finally got slapped in the face after AVGO 0.00%↑ AVGO reported earnings and crashed 14% after hours.

There is no support for AVGO until tomorrow morning or maybe when Europe Opens and Options start trading. See all these bars on the right-hand side of the chart? It means there are no puts to help cushion the blow of not delivering the goods in earnings.

Gamma Profile for AVGO Shows NO Puts of Significance

And AVGO is particularly important because their chips at kind of the tip of the spear, front of the supply chain for Datacenters and could indicate the beginning of the end here. I just hope we get at least a Bear Market in one day on it.

This is what a long squeeze looks like. It’s the opposite of a short squeeze.

So far, it’s not enough to keep Japan and the Middle East from rallying the thing as we see the after-hours Futures start trading. But Korea has come in and is in a bad mood! Europe is usually where we bottom (or on a gap down in the morning session) when it’s like this.

House Votes War Powers Down

The house is slowly growing a spine as the odds of re-election go down-down-down for everyone that sat back and watched Inflation spike after a stupid decision to go to War with Iran and light a cool $100 billion on fire without so much as asking Congress. And that doesn’t count the costs now from huge inflation.

The House produced a little squeak of resistance in a symbolic vote that says “knock it off” (PLEASE!) with the War in Iran.

The Senate has been sitting there waiting to move their same little symbolic gesture forward. We’ll see if anything comes out of it. What a joke our political system must look like to the rest of the World.

The funny part about this is that oil really isn’t moving that much (although it’s most certainly not going down). It’s the continued, slow bleed in approval ratings and inflation that is causing the sudden realization that things are really screwed up from the upper crust, and we might not be able to fix it.

The promises of “it’s over soon” and “we have a deal” and “it’s temporary” are all pretty much being exposed now - consequences are starting finally. The cats up there in DC have 99 lives, we’ll see if they can find a way out of this one again or not.

It certainly means that we have reached a newer, much more urgent phase for resolution and that’s the reason I’m even talking about this. This could be why Gasoline futures can’t get up and going - they are getting rejected right now at the Anchored VWAP off the highs.

Gasoline Futures

Remember, markets probably don’t care who “wins” this (very stupid) War as long as we get ships moving through the Strait. If that involves Trump having to capitulate and toss the mess into someone else’s lap (someone more capable) then that’s still going to result in more certainty and as a result lower prices for Energy.

Rich Folks Freaking Out

Check out this gem I noticed this morning on the YYY 0.00%↑ YYY (High Income ETF). It buys closed end funds (something Rich Folks love for income). We have some seriously stupid folks trading these markets and the action this morning shows it on full display.

Today CNBC was leading with blood in the streets on “Redemptions” from Private Equity funds.

That must have sent the Jim Cramer crowd into a tailspin. Someone must have owned a bunch of this ETF because they unloaded this morning after about 5 minutes on the open. People don’t understand you can’t just hit something semi-liquid with a market order of this size. It caused a mini-flash crash on the YYY. The poor fella that sold those shares ended up getting killed - fills were terrible. You are talking about -10% fills just to get out. What a moron!

YYY Dumps in the Morning

So - this is what is going on here. We have some kinds of idiots selling these "Bad Debt” type funds and asking for their money back. It’s a joke. They don’t know what they are doing, they have no idea what’s going on - how they work. They probably think this is like NVDA and you can just hit “Sell” and drop $5 million of supply on the market without problems. It doesn’t work like that.

These are the kinds of things that make me want to own these kinds of stocks - they are underpriced, CLEARLY.

Is AVGO A Surprise Really?

Look at GOOG 0.00%↑ GOOG. It’s down already 13% from the highs and is almost in a Bear Market already. All BEFORE earnings from AVGO.

Does that surprise you? It should not. This market has been falling apart for a while now - if you were hypnotized by MRVL and the NVDA pump yesterday, you missed it. And that’s going to be very costly tomorrow.

For Subs

We’ll see if we can find some trades now that there is a little blood in the streets. Not AI crap (but there is one name that is!). There is a bunch of other stuff that looks good down here and is oversold.