I can't stand when companies rally on sheer stupidity

Don Kaufman here.

I can't stand when companies rally on sheer stupidity…

Look, I often look at moves that are going on in the marketplace and I'm like, okay, this is getting ridiculous.

And I was thinking that the last couple of days about this rally - we're not having any two-sided action whatsoever.

But if you're looking for what I would interpret as almost like outright and blatant sheer stupidity in price action, I think Apple displays some of that.

The "Siri Sucks" Rally

Here's what literally happened yesterday: Apple said Siri sucked. Okay? And the thing rallied massively because they were gonna turn to what are definitively some of their competitors - Open AI and Anthropic.

But everybody's looking at this like they're not competitors, man.

It's gonna be an alliance between Open AI and Anthropic. Open AI is what, 49% owned by Microsoft? So now you have Apple dealing with basically Microsoft to fix Siri because they're incapable of building their own AI technology.

I mean, think about this.

We suck so bad that we're probably gonna have to buy something. Why didn't they buy something? They could've bought Anthropic. Nevertheless, when you start looking at this price action, it has been weak relative to tech, but I just cannot stand when a company is literally rallying on what I would actually term kind of like bad behavior.

What's Really Driving This Market

You know what's really going on here? This is all about squeezes, okay. Trading firms have figured out how to profit on short duration moves, and retail is just helping them.

Apple is an absolutely perfect example where you have a firm coming out here and they're buying calls and you're buying calls with them.

Everybody's making money on those calls, and they're going out there and hedging many of those positions off.

The marketplace has figured out how to kind of game the system a little bit. We get caught in these wild feedback loops where retail wants to buy calls - they don't wanna buy puts.

The Call Buying Mechanics Nobody Talks About

When you see "traded at the ask or above," effectively what it means is trading firms are coming in and they're doing what's called sweeping. They're going out and taking all the liquidity across every exchange.

But here's what people don't understand about this business - the professional world is different.

They can buy a call, and once they've made money in that call, they could go out and sell Nasdaq futures to lock those gains in.

They could use QQQ shares to lock those gains in. There's a million different ways for them to lock gains other than just go out there and sell the calls.

The Reality Check

The bottom line reality right now is that all returns over the last decade are big tech and that is it. The environment right now is buy tech pretty much at any price.

But when you're looking at Apple right now, which is literally saying we have failed in a given product again - because everybody forgets Titan the car, they gave up on the car, they fired everybody - how many products have they actually just foregone in some way, shape or form?

Nevertheless, everything is right in front of us. We have vision that can maybe see two feet in front of us, like maybe two days, right? And that's where the markets are at.

What I'm Watching

I'm still a firm believer that we're going to actually retest lows of today. With Tesla down some 5% and it's on the bid right now, but with Tesla down, it is really hard to stage a rally.

What else is driving the marketplace?

The answer is, there is nothing else driving the marketplace. You have Apple that is actually trying to pull the entire marketplace effectively higher.

And to me, the danger of this continues to be that it becomes every day like a one stock market.

The Trade: When this call buying frenzy in Apple shows any signs of exhaustion - watch for bid/offer spreads to widen beyond 3 cents and volume to dry up - that's your signal the manipulation is ending and the real price discovery begins.

To your success,

Don Kaufman

P.S. You know what? I'm sick of watching retail traders chase 50+ tickers while the pros focus on ONE stock and clean up.

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