EB Daily Market Report - Quick Update - Tuesday, March 12, 2024

Our major indices are mostly higher, but I just want everyone to be aware that MAX PAIN is SIGNIFICANTLY below current price and the RISK of prices falling short-term have increased by a lot. To give you an idea of the overwhelming amount of net in-the-money call premium, check out the following:

• SPY: current price 514.15, max pain 477.25, potential drop (-7.33%), net call premium ($4.23 billion)
• QQQ: current price 441.45, max pain 402.74, potential drop (-8.77%), net call premium ($3.70 billion)
• IWM: current price 204.15, max pain 192.42, potential drop (-5.77%), net call premium ($913.54 million)
• SMCI: current price 1153.69, max pain 875.21, potential drop (-24.14%), net call premium ($996.87 million)
• NVDA: current price 900.90, max pain 666.43, potential drop (-26.67%), net call premium ($7.69 billion)
• META: current price 495.11, max pain 404.99, potential drop (-18.20%), net call premium ($1.20 billion)

These 3 ETFs and 3 key stocks total roughly $18.9 billion of net in-the-money call premium. While NOTHING guarantees us lower prices or any type of market direction, the RISK of a short-term selloff is VERY REAL based on (1) max pain and (2) significant rotation to defensive or value-oriented areas of the market. I know it's a secular bull market and I won't beg against it, but I've been doing this a LONG, LONG TIME and I've never seen numbers like these.

Personally, I've decided to move roughly 50% to cash. I don't want to be entirely out of the market, but I've decided to lower my risk currently, realizing that I may have to re-enter at higher prices if a pullback does not occur.

You must decide your own risk tolerance levels and I don't believe this will impact those who are holding for the long-term, but short-term traders should at least be aware of the rising risk levels.

In tonight's Max Pain webinar for March, which will begin at 5pm ET, I'll highlight the market maker manipulation that took place last month to keep prices down. We may see something similar this month. Plan to join me this afternoon if you can. If you can't, try to check out the recording which will be sent out later this evening or tomorrow morning.

Finally, our BIG NEWS for April has been delayed 2 days, but it'll be out to all members TOMORROW! Stay tuned...

Happy trading,

Tom