With the start of the new year we decided it’s time to take a look at our ongoing crash comparisons for SPY, QQQ and XHB. We’ll note that we had put positions open that expire this Friday on XHB and other home builders and unless the market crashes on Friday, we’ll be taking losses on those puts (more on that at the bottom).
SPY Crash Comparisons
SPY is essentially at the same peak as it was in 2021 which is remarkable considering interest rates have gone up 525% and the cost to do business has gone up but markets can stay irrational longer than most people can stay solvent.
Next up QQQ:
The QQQs are actually higher now than they were back in 2021 so we’re not sure if we should start a new peak or continue to measure our crash comparison from the old peak.
And last XHB:
As mentioned earlier, we bet on XHB and other home builder puts for a crash/correction by January 19 2024 and with only 4 days left we are doubtful those puts will make money. XHB is actually 13% higher than the peak in 2021 which is also remarkable considering mortgage rates are hovering close to 7 percent and housing transactions have cratered but homebuilders are still going strong.
Was our thesis incorrect? We don’t think so, we continue to think this market is way over valued but there is no way of knowing when market participants will wake up and stampede for the exits. We continue to nibble at the market but are still heavily invested in short term T-bills earning 5 percent and our TLT is doing nicely so far from our entry point in the mid 80s but we still have a long way to go.
We’ll check back in on Friday to note how much we lost on those PUTS so stay tuned, stay profitable and stay solvent…