Market Whispers - 3 reasons to not BTD (Buy the dip) now!
Markets: Beachman's portfolio tactics based on his read of the markets
While everyone and their uncle is now a Middle East, military and espionage expert predicting the future of oil prices, the rise of inflation and the direction of stock prices, we remain focused on two things:
Learnings from recent Q1 earnings reports which helped us refine our shopping list of stocks that we want to buy and a long standing position that we have decided to sell.
Underlying flows and timing of monies into and out of markets that tells us to expect a relatively stable and potentially bullish week followed by more downside volatility leading into end June and beyond.
Read on to understand why…
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Table of contents
Overall market conditions
Beachman’s portfolio stance
Important dates
Market signals
Beachman’s plan
Overall market conditions
Trend: Bumping up against topside resistance.
Risk level: High.
Investor sentiment: Neutral / Greed.
Beachman’s portfolio stance
63% long. 46% hedged.
Established necessary hedges.
Done raising cash in line with my 2025 market roadmap.
1 trade in place (See current trades at Beachman’s Salty Trades).
Important dates
Jun 19th - Markets closed.
Jun 20th - June monthly options expiration.
Jun 30th - Q2 quarterly options expiration.
For short term trade ideas, check out Beachman’s Salty Trades.
On the daily, you can find Beachman in four places…
Beachman’s Substack chat line here
Beachman’s Substack feed here
Beachman’s X feed here
Beachman’s Threads feed here
Please check out the must-reads listed on the About page and the Roadmap page.
Market signals
SP500
The SP500 is bumping up against top side resistance between 6,000 an 6,100. It has faced this resistance several times in the past year…see on the chart above. There doesn’t seem to be enough catalysts to take it higher. Actually, to the contrary, that JPM collar CALL position at 5,905 is acting as a magnet that is holding the index back until June 30th when that JPM position gets closed (and rolled over to another strike/level).
So, the uptrend since the April lows is petering out and the market is running on fumes, while geopolitical fires are burning all around us - Middle East battles and US trade wars.
Volatility ahead
The most important story this week is how options trading could usher in new downside volatility into the markets over the next several weeks. Let’s try to understand how this could happen.
Fri June 20th is the largest options expiration on record…yes, we seem to have more and more of these each quarter.
This one is more than $4T in open interest value with a 7:1 CALL to PUT ratio. This expiration also holds over $1.6T in market maker hedging.
Now, because this is a CALL heavy expiration, MMs have been buying stocks to keep their hedges neutral. Here is how that mechanism works:
Traders buy CALLs (bullish position).
MMs sell CALLs (bearish position) to take the other side of the trade.
MMs have to hedge their positions to stay market neutral, so they buy stocks/futures (bullish position).
MM hedging is what is keeping the markets up this week even though we have negative macro and geopolitical news raging around us.
On Mon June 23rd, most of this $1.6T MM hedging goes away as the $4T in June monthly options expires. It will take time for the bulls to rebuild their positions and for MM hedging to continue to shore up the market.
So next week, we could see some more downside volatility.
But hold your BTD horses…
We still have the JPM collar position at 5,905 (on the SP500) that is expiring on June 30th. So this 5,905 level will act as a magnet for the index until the end of the month…again the same mechanism described above comes into play, but at much smaller volumes (estimated $25B).
Bottomline, I am expecting downside volatility next week and more of it after June 30th.
Corporate blackout starts
The next corporate share repurchase blackout period for most US publicly traded companies typically begins two weeks before the end of the fiscal quarter. This is approximately mid-June 2025 Q3 ending Sept 30th 2025.
Specifically, the blackout period starts this week around June 15–16 and lasts until 48 hours after the company releases its quarterly earnings, which is usually in late July or early August.
This will temporarily remove upside support for stocks with an active share buy back program in place.
Beachman’s plan
So what’s my plan in all of this? How am I navigating these markets now?
Here is how I intend to move forward…