Unusual Due Diligence: 7/9/21

Friday; July 9th, 2021 - Hello everybody! Welcome to Unusual Due Diligence, a semi-daily segment that covers the general end-of-day statistics of unusual options caught on Unusual Whales, a powerful tool that helps you analyze the live options flow and catch large trades that have the power to move the markets. Below, we’ll cover topics such as the most mentioned, the biggest gains and losses, the largest whales of the day, and even take a glance at how the Cryptocurrency market was performing. On Mondays & Fridays, depending on how the market is performing, I try to release two analysis documents outlining my personal due diligence on two different trades I take in that session. Statistically, Mondays & Fridays have the highest performing win rates on Unusual Whales, which is why I only post them on these dates. Finally, I’ll be posting my custom alert notifications in every Newsletter so you can do your own due diligence of some potentially high-yielding trades. Please be sure to subscribe below to get our newsletter sent out directly to you whenever it’s released. It’s Free!

Remember: This is NOT financial advice and nothing I say or do should be replicated without doing proper due diligence. Please only invest whatever you are capable of and willing to lose.


Quick Analysis on the Possibility of a Giant Market Crash

As everybody’s probably aware, the Market has been acting quite fishy since the start of the Pandemic at the beginning of last year. Since then, I’ve been hearing left and right that a market crash is imminent. Over time, it’s getting harder to take it seriously with nothing happening - but let’s take some time to do some quick analysis, shall we?

Previously, I wrote a short piece about the Federal Reserve’s recent stress test on over 23 different lenders. In conclusion, all of the banks were determined to have enough cash on hand to make it through a massive economic collapse. The scenario, which looked at the potential of a “severe global recession”, showed massive strikes at the commercial real estate and corporate debt holders, including peaks of unemployment at 10.8%, a 4% drop in gross domestic product, and a massive drop of 55% in equity prices. One part of the stress test that was extremely surprising was their prediction on inflation, which currently stands at 4.99%. In their scenario, Inflation actually falls to 1%! The entire scenario specifically referenced the 3rd Quarter of 2022, time and time again. It’s interesting because this scenario is actually chartable. For example, let’s say in 2021, prices for certain widgets or sectors rise by 10% from $100 to $110. The Federal Reserve is stating that the supply shortage will decrease, in which case, we can expect a deflation rate of 5%, bringing the cost from $110 down to $105 for that particular product. If this scenario replicates across multiple sectors of the market, it is in fact possible that we can see a decrease in overall inflation all the way down to 1%.

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Now, let’s take a look at the new data on Disposable Personal Income & Consumption. Disposable Personal Income relates to how much money, on average, a household has to spend or save after taxes have been deducted at the end of each year. Disposable Personal Consumption refers to the consumer spending on goods or services at the end of each year. As you can see, households have more money than ever, yet, are spending less than ever before. At the beginning of the pandemic, you see a massive fall in spending and a massive increase in saving. This can be relative to economic stimulus and unemployment advances, especially in states such as California, where you can be receiving an additional $450/Week in State unemployment benefits on top of the $300/Week provided by Federal unemployment benefits. In total, you can be making an average of $3,000/Month by being unemployed. This doesn’t even include the new $3,600 Tax-Credit that will be going out just 6 days from now. However, all of that is about to come to an end, which is where we can expect to see some big movements in economic performance.

In September, they will begin to remove the unemployment benefits. There’s no new information on any upcoming stimulus or economic relief, meaning the people will have to fend for themselves this time around if no new information is released within the next couple of months. Not to mention, Wells Fargo has just cancelled all personal lines of credit, which will greatly impact the credit scores & ability to pull out loans for thousands of consumers. When looking at the chart above, you can see that disposable personal income has dropped substantially since its large increase, and is actually closer to normal levels at this moment. However, we can expect that line to decrease dramatically once these actions are put into effect across the nation.

When looking at the chart on Personal Consumption, we can see a massive drop at the beginning of the pandemic followed by a slow increase in normal consumption behaviour. However, we can actually see our first inflexion point on the chart since the pandemic began. This can be related to the end of the economic & unemployment relief, which is beginning to make people purchase less. Remember, we have less stimulus on the horizon, not more. This is alarming considering the crime rate in relation to poverty is already increasing drastically across the country, which can be a further cause for a more destructive effect in the future.

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Now, let’s take a close look at the housing market. First, we’ll look at the first graph representing new home listings. Usually, we can expect new home sales to begin slowing down at this time, based on the other Grey, Blue, and Red lines representing 2018, 2019, and 2020 respectively. However, we have yet to see that inflexion to the downside. When looking at the second graph referencing the median price of new listings, we can usually expect prices to begin falling as sales begin slowing down. However, that is not the case for 2021. We can actually see that housing prices are MASSIVELY increasing far above average, while listings are staying relatively consistent. So, what exactly happens in this situation when the ask-price just keeps rising? If you take a look at the 3rd chart referencing pending home sales, you can actually see that sales are falling dramatically at a faster rate than we have seen in the last 5+ years. Nobody is buying, everybody is selling. The ones that do sell are selling greatly overvalued to large corporations, such as BlackRock Inc., which is funded by the Federal Reserve (money printer go brrrr). These corporations have the power to easily outbid any and all buyers without breaking a single sweat. Guess what they’re doing? They have diamond-hands. They are not selling, and they won’t sell for a very, very, very long time. The housing market is turning towards renters, and the media is pushing it. Now, let’s finally go over a quick summary of everything we’re seeing here today:

  1. Disposable Income is DECREASING

  2. Consumption is DECREASING

  3. Real Estate is DECREASING

  4. Financially-related media content is DECREASING

  5. Unemployment benefits are DECREASING

  6. Economic relief is DECREASING

  7. Federal Reserve is moving closer to TAPERING

  8. Retail Explosion is ENDING

  9. Speculation & momentum is DECREASING

  10. Bond Yields are DECREASING

  11. Personal Lines of Credit are being ENDED

  12. Banks are HOARDING CASH

  13. Reverse-Repo Markets are INCREASING

  14. Commodities & Cyclicals are DECREASING

  15. Record-High S&P500

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So, what is there to do about this whole mess? Well, as the warning states at the beginning of this letter, I am not giving any financial advice. However, I will tell you what I’m doing to prepare for myself. Please continue to educate yourself on this subject and try to learn of the different types of routes you can take to properly manage your risk.

I am not buying any shares of any stock at the moment. Margin is completely off of the table and is not even considered to be an option for me at this point in time. I have closed out of a considerable amount of my long-term options while focusing more on weekly trades that aren’t far from out of the money (I am still HODLING the MEMEStonks I’m already invested in). Across the board, my stop-losses are all at 15% below and 20% above. Most of my investments are currently going into Cryptocurrency, such as $USDT & $BTC. $USDT is my stable-coin, which will always be equivalent to $1 USD and does not fluctuate. With $USDT, I have a variety of options to make my money work for me, such as staking and earning up to 12% per year. $BTC on the other hand, as an investment coin, is the safest bet for a long-term position due to its mass public adoption in various countries, such as El Salvador. When I say long-term, I’m talking decade+. These things don’t happen overnight, the last coin will be mined in a century. Over the next century, growth is almost guaranteed as long as adoption continues. To be honest, I’m also starting to consider hoarding cash. The issue is, I do not make enough income to make my cash-on-hand worth it, but it’s still something I am strongly considering. With cash-on-hand, I am READY for opportunities. If high inflation occurs, I can invest my cash into an asset that will considerably rise in value. Remember, the banks are hoarding cash themselves to an absurd degree. I like to observe the whales and keep an eye on the direction they’re heading. Warren Buffet’s Berkshire Hathaway Inc. has over $140 Billion in cash-on-hand and has been hoarding for years, looking to reach $175 Billion by the end of the year. The idea of building up a savings account seems flattering as well, to say the least. Anywho, this concludes my segment of quickly analyzing the possibility of a market crash. Below, I’ll go over today’s data on the options flow.


Unusual Whales: The Top Five Percent Changes of the Day

Winners in the Last 24 Hours

$SVXY 2021-07-30 C $59.00: +80.65%

  • $1,000+ Premium, Ask-Side

$DIDI 2021-07-16 P $9.50: +71.43%

  • $7,500+ Premium, Ask-Side

$XLU 2022-06-17 C $70.00: +46.40%

  • $250+ Premium, Ask-Side

$ENDP 2021-08-20 P $3.00: +40%

  • No Premium, Ask-Side

$GM 2021-08-13 C $65.00: +34.65%

  • $10,000+ Premium, Ask-Side

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Losers in the Last 24 Hours

$CHWY 2021-07-16 P $77.00: -52.94%

  • $6,000+ Premium, Ask-Side

$PTON 2021-07-23 C $131.00: -38.27%

  • $7,500+ Premium, Ask-Side

$AMD 2021-07-30 P $79.50: -32.10%

  • $25,000+ Premium, Ask-Side

$NET 2021-07-16 C $116.00: -31.96%

  • $2,000+ Premium, Ask-Side

$NEGG 2021-07-16 C $55.00: -28.07%

  • $12,000+ Premium, Ask-Side


Unusual Whales: The Top Five Largest Whales of the Day

Live Flow: $8,000,000+ Premium, No Index, No ETF, Ask-Side

$W 2022-01-21 C $50: $126,000,000 — Size: 4,963 — Volume: 5,000 — OI: 5,000

$TSLA 2021-09-17 P $700: $27,000,000 — Size: 3,000 — Volume: 3,000 — OI: 6,900

$SQ 2021-09-17 P $250: $15,000,000 — Size: 6,000 — Volume: 6,000 — OI: 1,900

$MSFT 2021-07-16 C $260: $12,000,000 — Size: 7,500 — Volume: 7,500 — OI: 37,300

$AAPL 2023-01-20 P $150: $9,000,000 — Size: 3,750 — Volume: 3,800 — OI: 8,900


Unusual Whales: The Top Mentioned Stocks Today

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FURUS


Unusual Whales: Cryptocurrency Flow for Today

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Unusual Whales: My Custom Notifications of the Session

$FXI 2021-07-23 C $46.50: +-0%

  • $2,500+ Premium, Ask-Side

$HAL 2021-08-06 C $24.50: +6.12%

  • $500+ Premium, Ask-Side

$FUBO 2021-07-23 C $33.00: +8.20%

  • $2,500+ Premium, Ask-Side

$MRO 2021-08-06 C $14.00: +1.96%

  • $750+ Premium, Ask-Side

$CS 2021-08-20 C $11.00: +-0%

  • $100+ Premium, Ask-Side


Usually, I’ll try and post two Analytical Documents on two trades I take every Monday & Friday. Today, all the Alerts were generally Bullish, and there were not great Premiums. The Market looked too weird on Friday to take a trade, I’ll be checking again Monday. If come Monday, and there is still no trades, I’ll then open up the DD Documents to the rest of the week. Sorry for the inconvenience!


Alright, Apes! That is all for today! I hope you enjoyed this segment of Unusual Due Diligence, please be sure to stick around for more coming soon! I’m constantly looking for ways to improve my segments and make sure I’m giving out the most beneficial information possible. Please leave a comment and let me know how I can improve! I’d love to hear of different types of Analytics you’d like to see on a daily basis, things I’m missing, or even things that I should take out. You can also leave a comment talking about any plays you might have made today! Let me know!

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