Purple Drink's 6/8/2025 Market Recap

Big Test Coming

Hi everyone, hope you are all enjoying your weekend.

For those who may be less familiar with my recent posts, I have been extremely bullish on US equity markets since mid/late April, noting:

• Capitulation out of the post-Liberation Day lows

• Multiple breadth thrusts including the Zweig Breadth Thrust we anticipated in April

• A Power Trend triggering recently, which indicates an “all dips get bought” environment until further notice

• The newly elected White House shifting sharply from a message of austerity during Q1 to the realization that they have to overheat the economy in an attempt to “outgrow the debt” - completely unrealistic, but informative for risk-on

• Persistent bearish sentiment and lack of honest recognition of what price is confirming, overall a sad state of affairs for the bears

Since launching this Substack in mid-March, I have performed +36% vs. SPY +7% during the same period - proud to be posting alpha in here that I hope others have been able to participate in. As always, live trade executions are posted in the Substack chat for paid subscribers - I hope you are all enjoying this to date and I look forward to fruitful trading in the weeks and months ahead.

For anybody who may be interested, I recently hopped on the Value Hive podcast to chat all things markets with Brandon Beylo (@marketplunger1 on X) - the Spotify link is below, give it a listen!

CURRENT OPEN BOOK (all longs) - as posted in Substack live chat

ARCHER AVIATION (ACHR) - 5% at $7.93

HIMS & HERS HEALTH (HIMS) - 8% at $54.65

PALANTIR (PLTR) - 8% at $117.50

MICROSTRATEGY (MSTR) - 16% at $377

REDDIT (RDDT) - 8% at $110.71

D-WAVE QUANTUM (QBTS) - 8% at $16.83

PRECIGEN (PGEN) - 8% at $1.47

INTEL (INTC) - 8% at $22.29 (believe me, I know)

SILVER ETF (SLV) - Jan26 $31/$42 call spread; 4% position at $2.14 (now $3.03)

ARM (ARM) - Jun27 $100 call; 4% position at $55.40 (now ~$61)

WILLIAMS (WMB) - Mar26 $50 call; 4% position at $13.10 (now $13.30)

TEMPUS AI (TEM) - Jan26 $45 / $100 Risk/Reversal at $0.50/contract (now $0.50/contract); short puts imply 16% position if assigned

BLOOM ENERGY (BE) - Jan26 $15 / $30 Risk/Reversal at -$0.21/contract (now $1.15/contract); short puts imply 8% position if assigned

ANTERO RESOURCES (AR) - Jun26 $33 / $50 Risk/Reversal at -$0.98/contract (now -$0.15/contract); short puts imply 16% position if assigned

UBER (UBER) - Jan26 $72.5 / $115 Risk/Reversal at -$0.59/contract; short puts imply 16% position if assigned (now -$1.50/contract)

UNITY SOFTWARE (U) - Jan26 $20 / $50 Risk/Reversal at -$0.90/ contract (now $0.90/contract) ; short puts imply 8% position if assigned

NEBIUS (NBIS) - Jan26 $30 / $60 Risk/Reversal at -$0.13/contract (now $5.70/contract); short puts imply 8% position if assigned

VERTIV (VRT) - Jan26 $90 / $150 Risk/Reversal at -$3.85/contract (now $0.15/contract); short puts imply 16% position if assigned

FIRST SOLAR (FSLR) - Jan26 $140/$220 Risk/Reversal at -$2.78/contract (now $0.00/contract) - short puts imply 8% position if assigned

COREWEAVE (CRWV) - 6/13 $160 calls - 0.3% position at $8.99

Every one of the above entries has been noted live in the Substack chat over the past few months, and I will continue to post executions there including potential exits on any of these positions. Please note that a few of the common stock positions are in a separate long-term account - all position sizing is translated into what it would be if all positions were managed in the same shorter term account where I normally trade. This is why if you add up all of the positions they exceed 100%, not to mention that the risk reversals tend to tie up less margin than the equivalent common stock position.

MARKET SUMMARY

In line with my previously stated forecast, the S&P continues to look great with a bounce right off that gap fill / daily 8ema tap producing a weekly close right at $6,000.

Looking over to the left, I believe that at a bare minimum, SPX still has 2 gaps above to fill - the first being ~$6,030 and the second being ~$6,085. Given we finally had our first weekly close over $6,000 since February, I have a hard time seeing these gaps not filling next week. I expect us to test $6,100 this week if not prior all time highs.

As far as sentiment and positioning go, we still have significant room to the upside. AAII bears have outnumbered bulls in 17 of the last 18 weekly polls - a historic run of pessimism.

NAAIM exposure as of Thursday 6/5 is 82 - institutional nets are creeping up, but are not at levels that indicate an imminent short term top.

Sentiment indicators published regularly by GS research are also stubbornly bearish.

% of Stocks above their 5 day moving average are slightly elevated but not at levels that typically precede a sharp short term reversal.

Bitcoin, our most straightforward risk on/off gauge during weekends, looks extremely constructive as it quickly found support at its rising 50 day moving average on Thursday, put in an inside daily candle on Friday, and has been rallying this weekend including what currently looks like an undercut and rally over the daily 8/21 moving averages.

As if we needed one last chef’s kiss, Barron’s has the below headline right at the top of this weekend’s article - a decent sentiment check indicating this rally is going to continue being absolutely despised.

I remain extremely bullish over the next 10-16 weeks and believe that we will see significant new all time highs on SPX by the fall, likely exceeding $6,500. With that said, I believe we are fast approaching a potential area of resistance both in price and time.

Look again at the SPX daily chart with the red circles. We effectively have a double top earlier this year. Given the V-shaped recovery we have had as successfully predicted in this Substack since April, I’m hesitant to expect aggressive new all time highs before some back-testing / retracement. I continue to believe that 5/12 China bull gap will be defended, with any possible weakness bottoming at $5,750 - $5,800. Another minor thing just to keep in mind - throughout this bull market since late 2022, we have had some weakness / uncertainty into quarter end + Mag7 earnings almost every single quarter. I don’t expect it to be quite as easy over the next few weeks as it has been since 4/7.

I did not peel off any longs on Friday, but expect to begin trimming or outright closing positions later this week based on the above roadmap. I expect the next really fat pitch to be the weakness I’ve outlined, as adding significant exposure in single names at $5,800 SPX should offer torque on the way up to new all time high’s / $6,500+. When we reach new all time highs, that is going to be a base breakout that dates back to November 2024 - it will be a VIOLENT move up for that basic reason.

SINGLE NAMES OF INTEREST

In general, I believe a lot of the names I am currently in will perform well into the fall - I just plan to be cautious given my base case has been correct since April and I do expect some mild weakness here soon. If we do see weakness during which my book is lighter, I’ll do some studying and decide how to re-engage longs. As written on Thursday, I do believe NVDA and BTC should be very strong leaders in the event SPX puts in significant new all time highs, so those will also be at the forefront of my watchlist.

OIL / ENERGY UPDATE

As I wrote about a few times in late March / early April (link below), I am very bullish long term on the energy complex, specifically oil and gas.

I’ve received a few inbounds regarding oil recently, so just wanted to quickly address it. Looking at the WTI chart below, a short term rally to test that declining 200 day moving average at ~$68/bbl looks likely. With that said, I’m not in a rush to long the complex here given the extremely high likelihood that any initial test of that level should provide intense technical resistance. I don’t expect oil to take out its 200 day on this first go since April - I’d rather wait to see confirmed follow-through or more basing /weakness into the fall which I personally anticipate. Will be watching this closely, and as with any other trades, will post my positioning in the Substack live chat if price does in fact tell me I need to get involved.

That will cap off today’s update, I hope you all enjoy the rest of your Sunday and have a fruitful beginning to the week. I will be out with the usual Tuesday evening post in a few days.