AJB Capital

Let me catch you up on where things stand heading into the week.

Last week was rough for the broader market. Hot CPI, hot PPI, bond yields ripping higher, and our momentum readings were showing real deterioration underneath the surface. The mega caps were holding things together but the average stock was getting sold pretty hard. The Russell was cracking. It felt like the air was coming out.

This morning is a different story. Our readings flipped from negative in the pre-market to positive at the open. The buying is broad. The number of names in breakdown territory dropped from over half the index on Friday to a handful this morning.

The longer-term readings on small caps haven't fully healed. But the daily pressure has reversed hard and if this holds through the afternoon we go into tomorrow with a much better setup than we had going into today.

Now, the stuff we've been flagging hasn't gone away. The 30-year is still above 5.1%. The 10-year hit 4.6% last week. Bitcoin dropped from 82,00

Back-to-back hot inflation prints. CPI at 3.8% yesterday. PPI this morning at 1.4% month over month, nearly triple what the Street was expecting. That's the biggest single-month jump in producer prices since March 2022. Year over year at 6%. Energy up almost 8% on the month. Gasoline up 16%. Every stage of the pipeline just printed multi-year highs.

The reaction this morning has been telling. The broad market is selling hard. Over 60% of S&P 500 names are on the wrong side of the daily trend right now. The equal-weight readings on our system, which track what the average stock is doing, just broke their weekly trend for the first time in this run. Small caps are barely clinging on. The broader market is cracking under these numbers.

But the mega caps are fine. They sold off briefly this morning and bought right back. The largest names in the S&P and Nasdaq are holding up while everything underneath them deteriorates. The gap between what the biggest stocks are doing and what the average

If you're staring at the Riot (RIOT) move this week and wondering whether you can still get in on it, let me present an alternative to chasing it at these levels.

The stock just hit a 52-week high above $24. It's up nearly 30% over the last five days. I get the temptation. But instead of buying shares up here, you can sell a credit put spread and let the trade come to you.

June 18 expiration. Sell the $18 put for about $0.52, buy the $17 put for $0.37. You collect $0.15 in credit on $0.85 of risk. Your breakeven is down around $17.85, which is roughly 26% below where the stock is sitting right now. That gives you about an 80% probability of keeping that premium at expiration for a 17.6% return on the margin you lock up.

If it stays above $18, you keep the $15 on every $85 in margin. If it pulls back to $18, you take ownership of the shares at a price you chose in advance while everyone else is panicking about the drop from $24. Then you can start selling calls against it or just hold a na