| | | | 14,000 Amazon Layoffs?!
First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter.
Amazon announced some big-time layoffs early Tuesday morning, letting go of 14,000 corporate employees. The cut represents about 4% of its workforce, and the stock is about 0.8% higher. We’ll discuss that and more, so…
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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When Everyone's Drunk on Leverage, It's Time to Find the Exits
There's a moment at every great party when you realize things have gone too far.
Maybe it's when someone's standing on the furniture. Maybe it's when that weird cousin starts laughing a little too loud in the corner. Or maybe — just maybe — it's when margin debt hits $1.13 trillion and Wall Street starts rolling out 5x leveraged ETFs on single stocks.
5x?!
Yeah, we're at that moment.
The punch bowl isn't just spiked anymore — it's laced with speculative insanity that makes the dot-com bubble look like a Tupperware party. And I'm not being dramatic here. Let me walk you through what's actually happening beneath the surface of this market.
The Leverage Monster Nobody's Talking About
So what's really in that punch bowl? It's leverage — and not your grandpa's "borrow a little money from the broker" kind of leverage.
That $1.13 trillion in margin debt represents money borrowed to chase the same handful of tech darlings. It's a massive game of musical chairs, and everyone's convinced they'll find a seat when the music stops.
But here's where it gets truly wild. Wall Street looked at that situation and said, "Hold my beer."
Now we've got 5x leveraged ETFs on individual stocks like Nvidia (NVDA), Tesla (TSLA) and Coinbase (COIN). Think about what that actually means for a second.
If Nvidia goes up 10% in a day, you might make 50%. Sounds fantastic, right?
But flip that around. If Nvidia drops 20%, that's 100% of your money — gone. Poof. Finished before you can even log into your Robinhood account to see what happened.
This isn't investing. It's gambling on a scale we haven't really seen before, driven by pure FOMO.
How to Position When the Punch Bowl Gets Pulled
Look, I'm not here to be the guy lecturing everyone about responsible drinking. I'm here to help you understand what happens when $1.13 trillion in borrowed money starts unwinding.
It won't be slow. It won't be orderly. It's going to be sudden and violent, with brokers force-selling positions across the board. And when that happens, everything goes down — the good, the bad and the overpriced.
So here's how I'm thinking about this environment. First, identify the companies serving the punch — names like Robinhood (HOOD) and Coinbase making fortunes on trading volume.
It's the oldest rule in the book: Go for the picks and shovels, not the gold.
Second, position for the inevitable hangover using inverse ETFs. Think SH for shorting the S&P 500 (SPY) or SQQQ for 3x inverse exposure to the Nasdaq (NDX). These are the designated drivers of this party.
Third, keep cash ready. When the unwind comes, you'll want a shopping list of quality names that get dragged down with everything else. I'm talking defensive positions like Gilead Sciences (GILD) in health care or General Mills (GIS) in consumer staples.
Not as exciting as 5x leverage on Tesla? Sure. But they're also not going to zero in one afternoon.
The punch is spiked, the host is nervous, and that weird cousin is still laughing in the corner. Don't be the one staring at the punch bowl when the cops show up.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!
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