Be Careful What you Wish For

*I decided to publish another letter this week for you guys, given the calamity on Friday, and the major levels we are hitting in $WGMI which affects some of my biggest trades.*

Trading is a bit like predicting the weather. With the right combination of conditions you can do it with pretty high conviction and accuracy. Without ideal conditions, all you can do is prepare for a variety of possible outcomes. While I pride myself on not being an analyst that sticks his neck and gives high conviction trades, this is not a week where I can do that. The trend UPWARDS continues to be incredibly strong, but Volatility has awoken, and I think risk is being underpriced here, from both a literal, and sentiment perspective. The Trump/China tariff war has reignited, and on Friday it shocked complacent markets and cocky retail traders. I do not believe Xi’s resolve has been remotely priced in here and the risk to the downside is significant, at least in the short term.

On October 8^th in my last letter, I offered these words of wisdom, and they still stand “Divergences are piling up on lower timeframes, and risk builds every day – taking stock of how much risk is in your portfolio and selling into strength is wise here…”

The Crypto Market took a major hit and BTC is not looking quite as promising as last week… We could easily correct down to 98-100k~ area with further news catalysts. While I ultimately see higher (160k+ before year end), I do not have a clear short term path here. All I can say with conviction, is raise some cash, and IF we get a 100k~ test, buy it.

I can’t update the short term path as much as I’d like via this newsletter, so I share the shorter term paths via twitter. Those calls have been exceedingly accurate, and I recently gave followers the top on October 6^th .

In terms of Crypto/AI exposure, I’ve been tracking $WGMI for months, as well as my biggest+best trade of the year which was Terawulf. $WGMI is looking wildly overbought here, is at the 1.382 fib extension, and also has a weekly TD9 (see the red arrows). I am seeing incredibly one-sided sentiment, and downright arrogance from many traders after big runs in stocks like $WULF, $IREN, and $BITF. These kinds of traders tend to get used as exit liquidity… Look at this chart and tell me if it’s a good idea to get long here? Do you want to fade the recent track record of these red arrows?

$WULF was the trade of the year for me, and many subscribers. I recommended this at $2.5~ and had this $16~ target which seemed insane at the time. My grandfather used to say “be careful what you wish for, because you just might get it”. Astoundingly, there is still 35% short float on this name, so it could go higher into year end. However I personally ran over 700% on this one, and I am letting it go. Hedging is too expensive here given the cost of option premium.

Our other BIG trade for this year has been the $MARA December 20 Strike Calls. I’ve had these for over 6 months, and it’s frankly been a bumpy, and mediocre ride. MARA ended up being one of the worst performers in the sector (while WULF was one of the best). That all said, these options are up around 200%, and while I have a further bull case for MARA, I am selling half here to reduce risk coming into the next week+.

My longer term targets are $26, $40, and $70+ on MARA, which are easily attainable if they have a sustained pivot into the AI/HPC data center world – of which the smart BTC miners are doing. That said, the CEO has been consistently diluting shareholders (asshole), and these options only have about 60 days left on them, so decay will start to become more of a factor here. I’ll be keeping the rest for a shot at a 10x, which was my original thesis here.

Precious metals look absurdly overbought as well, I expect a pullback to at least $4000 in the coming 1-2 weeks. I would continue to trim exposure into this rally.

GLD call buying is at it’s highest level EVER (this is retail piling in), as well as ETF inflows… looking at the chart below you can see the spikes in ETF inflows, which are typically followed by price tops in Gold.

In a nutshell, I am seeing risk across a lot of asset classes, and while I am still bullish I have trimmed several positions, and closed others. IF we get further pullback we’ll buy in late October for a year end rally. For now I want higher cash and less risk. If there is no pullback and we keep melting up, then great!

I’ve posted the track record below of my suggestions since I started publicly posting the newsletter in April. We’ve done extremely well, our stock picks and option trades have brought significant alpha, as well as timely hedging and sector picks like the AI/Data centre play well before the public caught on. Most of the losses are from altcoins (this sector has been near impossible to make money in this cycle). Keep in mind, this 4000%~ is cumulative and nowhere close to a realistic portfolio return, I am aiming for around 100% YTD for my personal portfolio.

TLDR;

1. Risk is building here across equities, highly vulnerable to China/Trump deterioration

2. Added POET Tech around $7.4 on Friday, filled TGT Calls as well

3. BTC Vulnerable down to 98/100k

4. Gold wildly overbought

5. $WGMI/Crypto miners vulnerable to pullback

Trades:

Added POET $7.4 (in accordance with the last newsletter on October 8th)

Added TGT December 110C filled at $1.05 Friday (mentioned this setup +limit order in the September 22^nd letter)

Closed WULF at $16.20

Closed HALF of MARA Dec 20C at $5.80

Closed BABA at $167

Closed the Remainder of GRAB Jan 7.50C