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Sebastian Rudloff

August 3, 2026

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(WILL SEASONALITY GRIP THE MARKET ACROSS AUGUST & SEPTEMBER THIS YEAR?)

 

August 3, 2026

 

Hello everyone

 

WEEK AHEAD CALENDAR

Monday, August 3

9:45 a.m. S&P Global PMI Manufacturing final (July)

10:00 a.m. Construction Spending (June)

10:00 a.m. ISM Manufacturing (July)

Earnings: Clorox, TKO Group Holdings, Palantir Technologies, the Williams Cos., Vertex Pharmaceuticals, ON Semiconductor, Diamondback Energy, Alexandria Real Estate Equities, Marriott International, Loews, Tyson Foods, the Progressive Corp.

 

Tuesday, August 4

10:00 a.m. Durable Orders final (June)

10:00 a.m. Factory Orders (June)

10:00 a.m. JOLTS Job Openings (June)

Earnings: Prudential Financial, Advanced Micro Devices, DaVita, Wynn Resorts, Booking Holdings, Paramount Skydance, The Mosaic Co., Jacobs Solutions, International Flavors & Fragrances, Gilead Sciences, Emerson Electric, Devon Energy, Health peak Properties, Arista Networks, Amgen, Assurant, Sysco, W.W. Grainger, Public Service enterprise Group, Cummins, TransDigm Group, Rockwell Automation, Duke energy, Broadridge Financial Solutions, Pfizer, Zebra Technologies, Merck & Co., Kimberly-Clark, Caterpillar, Apollo Global Management, Revvity, Gartner, DuPont de Nemours, Archer-Daniels-Midland, Waters, Qnity Electronics, NRG Energy, McDonald’s Fidelity National Information Services, Marathon Petroleum.

 

Wednesday, August 5

8:15 a.m. ADP Employment Survey (July)

9:45 a.m. S&P Global PMI Services final (July)

10:00 a.m. ISM Services PMI (July)

Earnings: CF Industries Holdings, MetLife, Costco Wholesale, McKesson, Block, Sandisk, Ebay, Applovin’, Expedia Group, Axon Enterprise, Western Digital, Texas Pacific Land, Solventum, Occidental Petroleum, News Corp., Motorola Solutions, Honeywell Aerospace, DoorDash, Atmos Energy, APA, Allstate, Albemarle, Phillips 66, Insulet, Uber Technologies, Global Payments, Eli Lilly, Walt Disney Co., Zimmer Biomet, CVS health, The Kraft Heinz Co.,

 

Thursday, August 6

8:30 a.m. Initial Claims (08/01)

8:30 a.m. Unit Labor Costs preliminary (Q2)

8:30 a.m. Productivity preliminary (Q2)

10:00 a.m. Wholesale Inventories final (June)

Earnings: Republic Services, Gen Digital, Aflack, The Trade Desk, Akamai Technologies, ResMed, Consolidated Edison, Airbnb, Ralph Lauren, Zoetis, Howmet Aerospace, Fastenal, Evergy, Datadog, ConocoPhillips, Viatris, Molson Coors Beverage, Warner Bros, Discovery, Kenvue, Keurig Dr. Pepper, Fiserv, Constellation Energy.

 

Friday, August 7

8:30 a.m. Hourly Earnings preliminary (July)

8:30 a.m. Average Workweek preliminary (July)

8:39 a.m. Manufacturing Payrolls (July)

8:30 a.m. Nonfarm Payrolls (July)

8:39 a.m. Private Nonfarm Payrolls (July)

8:30 a.m. Unemployment Rate (July)

3:00 p.m. Consumer Credit (June)

Earnings: Take-Two Interactive Software, PPL, Vistra.

 

There are hurdles aplenty to get through this week.

Momentum carried the stock market at the end of last week, but can it continue this week?

Mr Leopold Aschenbrenner ignited a roller coaster ride in the market last week.  He was forced to unwind many of his hedge fund trades following big losses in artificial intelligence stocks.  The unwind at his hedge fund, Situational Awareness, added to the resurgence. 

The bounce we got last week implies some near-term upside, but will the broader market be able to push through to the upside convincingly?   If it doesn’t, we may stall out and roll over for more downside in search of a more solid bottom.

Next week’s jobs report is expected to show an OK labour market.  The U.S. economy is expected to have added 87,500 nonfarm payrolls in July, up from 57,000 jobs the previous month, according to FactSet consensus estimates.  The unemployment rate is also set to edge higher, to 4.3% from 4.2%.

Earnings season rolls on this week.  We will get a better insight into the health of the consumer this week with reports from McDonald’s, Kraft Heinz, and Costco Wholesale. 

Although we had big tech reports last week, we do still have some tech companies delivering numbers this week that we need to keep an eye on.  These include Palantir Technologies and Advanced Micro Devices.

Many investors remain bullish on the market, particularly after the strong numbers delivered by big tech last week.  According to FactSet data, aggregate corporate profits for S&P500 companies are tracking to grow more than 47%.

It is important to note that the path will not be linear.  There are challenges ahead, including the fast-approaching midterm elections and the interest rate outlook.  Additionally, seasonality is set to be a potential dark cloud, with August and September historically weak months for stocks.

So, let’s see if the market can push through.

 

Situational Awareness suddenly became very situationally aware last week

Leopold Aschenbrenner’s fund went from managing around $45 billion to around $10 billion in the span of three days after being forced into selling off its listed-stock positions.  A reversal in the momentum of AI stocks triggered losses and set off margin calls and compulsory sales.   The hedge fund owned companies that supplied chips, data centres, power and other infrastructure behind the AI boom.  Public filings showed large stakes in Nebius, Bloom Energy, Sandisk, Core Weave, SharonAI and IREN as of March 31.  By July 29 last week, those shares had fallen between 50% and 78% from recent peaks.

The shorts the hedge fund held as a hedge rallied, which compounded the carnage.

But someone always benefits from these painful drawdowns.  Ken Griffin’s Citadel hedge fund reached a deal to buy the fund’s publicly traded assets at a good price.

 

The Yen gets support from the U.S.

If you have looked at the Yen recently, you will have noticed some significant movement off the bottom.  Due to some wringing of hands from both Japan and the U.S., a coordinated intervention took place as there were real concerns over U.S. Treasury markets and Japan’s financial system.

Before the coordinated response, the Yen had been hovering at multi-decade lows, sliding to 163.73 per dollar last Thursday before rebounding to 157.57 on Friday.

The coordinated intervention was the first U.S.-Japan joint operation to buy yen since 1998.

As Japan is the largest foreign holder of U.S. government debt, the U.S. had good reason to step in.  It was seeking to avoid a scenario where Japan would have to dump large quantities of Treasuries to finance unilateral intervention.

But will it make a difference long-term?  It might for a while.  However, for real change to happen, the Bank of Japan needs to implement structural change in underlying policies if there is to be any hope of a sustained yen rebound.

 

HEADLINE CORNER

Australia ends the fuel excise discount as at midnight August 2, returning the flat tax rate to its full standard amount of 53.7 cents per litre for petrol and diesel.   

The Commonwealth Games have come to an end in Glasgow, with Delta Goodrem performing at the closing Ceremony.  Australia secured 70 gold medals, and a total tally of 171 medals.

 

MARKET UPDATE

S&P500

The index is still in a tight range within a pennant pattern, and I am still looking for an upside breakout to confirm this price action as a continuation pattern. 

We find support around 7370, 7300, and 7230 and resistance at levels ~ 7515,7560 and 7620.

GOLD

The shiny metal has been ranging, possibly forming a triangle, which could mean more downside to new lows below the June $3943 low.  However, slowing momentum keeps us on our toes to be aware of a bounce.  If we do break the $3900 level, we could be on our way to as low as $3300.  This would take place over many months.

Support is found at 3970, 3945/50, and 3860.  Resistance is seen at around 4135/40, 4200, and 4240.

BITCOIN

Bitcoin has been showing some very tight ranges.  Downside to around 57k is still favoured.  But after this new low is reached, we should see a reasonable bounce, which will probably get investors very excited.  But this bounce could still be followed by further new lows.

Support is seen at around 61, 57 and 55, and resistance is found at 65, 70 and 70.75/71.

WTI CRUDE

WTI Crude turned lower as Trump called off strikes on Iran.  (Haven’t we heard that before??) It feels like there is market manipulation going on in the oil market.  That top around 92 has held well. We could see more wide swings as the geopolitical situation continues to sway markets care of Trump’s notes on Truth Social.    Support is seen around 70, 65, and 60.  Resistance is seen at levels 85,87.50 and 90/92.

 

HISTORY CORNER

On August 3

 

 

2004 – French photographer Henri Cartier-Bresson – who was a master of street photography, capturing what he called “the decisive moment” – died at age 95.

 

1992 – the American revisionist western Unforgiven had its world premiere, and it later won four Academy Awards, including best director for Clint Eastwood, who also starred in the drama, and best picture.

 

1984 - American gymnast Mary Lou Retton won the all-around event at the Los Angeles Games, becoming the first American woman to win an individual Olympic gold medal in gymnastics.

 

The Nautilus voyages below the North Pole

On this day in 1958, the U.S. atomic submarine Nautilus passed beneath the thick ice cap of the North Pole, an unprecedented feat.

 

1941- American entrepreneur and domestic lifestyle innovator Martha Stewart was born.

 

1921 – A day after being acquitted on insufficient evidence – largely because key evidence had disappeared from the grand jury files, eight Chicago White Sox players were banned from baseball for life, accused of receiving bribes to intentionally lose the 1919 World Series.

 

1900 – American journalist Ernie Pyle, who was one of the most famous correspondents of World War II, was born.

 

1778 – the opera house La Scala opened in Milan with a performance of Antonio Salieri’s Europa riconosciuta.

 

1492 – Columbus sets sail

Hoping to find a westward route to India, Christopher Columbus on this day in 1492 set sail on his first transatlantic voyage, departing from Palos, Spain, with three small ships – the Nina, Pinta, and Santa Maria.  Although he was an accomplished navigator, Columbus misjudged the Earth’s size and never reached Asia.  Instead, he reached the Caribbean, unknowingly opening sustained contact between Europe and the Americas.  His voyage launched an era of European exploration, colonization, and exploitation that profoundly reshaped – and often devastated – the Indigenous peoples of the Americas.

 

QI CORNER

Vincentius Liony (Retired Leader)

 

 

 

SOMETHING TO THINK ABOUT

 

 

Cheers

Jacquie

 

Sebastian Rudloff

How I made a 40.15% Profit in July

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I just racked up a +40.15% profit in July, with all 26 round trips making money and another six trade alerts profitable but unrealized.  It is the best month in the 20-year history of the Mad Hedge Fund Trader. This is against an S&P 500 (SPY) average that was essentially unchanged.

I didn’t take any wild or insane risks to bring in these blockbuster numbers. There was no betting of the ranch here. I execute a strategy that I have been developing over the last 50 years.

I carefully balanced long and short positions. I bet some industries would succeed while others would fail. I employed the most aggressive risk control I have ever executed. I was only 100% fully invested for a few days, mostly maintaining an ample cash position I could put to work in special situations.

I made several crucial assumptions in June. I bet that technology stocks (XLK), especially semiconductors (SOX), were dangerously overbought and due for sharp selloffs. The SpaceX (SPCX) IPO in particular was over promoted, was pushed too high by speculators and was a generous source of short positions.

On the other hand, sectors long ignored by the market, like biotech (IBB), (REGN), health care (XLV), and industrials (XLI) suddenly came to life. Financials (MS), (GS) continued a great run that began a year ago. Software stocks (MSFT) seem to be bottoming out.

There was even a big rotation within the Magnificent Seven, into Apple (AAPL) and out of the other six. This is because Apple has preserved their enormous cash flow while the rest sacrificed theirs to the AI buildout.

The indexes themselves, like the S&P 500 (SPY), NASDAQ (QQQ), and the Russell 2000 (IWM) would go nowhere since active sector rotation under the surface was still keeping money in the market, not taking it out. That set up nice shorts for the (SPY).

Finally, thanks to my extensive on-the-ground research in the Persian Gulf in March, I believed that any selloff in oil was temporary at best and a big rally in the energy sector (USO), (XOM), (OXY) was coming. That happened. I think the Iran War is going to go on indefinitely and you should be buying every dip in energy (XLE).

Sometimes the black swans go your way. The emergency forced liquidation of the Situational Awareness hedge fund dumped millions of shares of Micron Technology (MU) at market, making my shorts there look like a stroke of genius.

Every one of these assumptions proved accurate. Sometimes, everything works. As I keep repeating, the harder I work the luckier I get.

I got a big tailwind from unprecedented market anomalies that I, but few others, spotted. Options implied volatilities are at record highs, vastly increasing the profitability the options spread strategy I employ. Suddenly, the profitability of my positions doubled.

I’ll keep pursuing this strategy as long as it works. Could this become my first 100% year?

We shall see.

Good Luck and Good Trading, 

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

 

 

april@madhedgefundtrader.com

Playing the Short Side with Vertical Bear Put Debit Spreads

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For me, the glass is always half full, not half empty, and it’s usually darkest just before the dawn. After all, over the past 100 years, markets rise 80% of the time, and that includes the Great Depression.

However, every now and then, conditions arise where it is prudent to sell short, or make a bet that a certain security will fall in price.

This could happen for myriad reasons. The economy could be slowing down. Companies might disappoint on earnings. “Sell in May, and go away?" It works….sometimes.

Other securities have long-term structural challenges, like the US Treasury bond market (TLT). Exploding deficits as far as the eye can see assure that government debt of every kind will be a perennial short-term problem for years to come, but not yet.

Once you identify a short candidate, you can be an idiot and just buy put options on the security involved. Chances are that you will overpay and that accelerated time decay will eat up all your profits, even if you are right and the security in question falls. All you are doing is making some options trader rich at your expense.

For outright put options to work, your stock has to fall IMMEDIATELY, like in a couple of days. If it doesn’t, then the sands of time run against you very quickly. Something like 80% of all options issued expire unexercised.

And then there’s the right way to play the short side, i.e., MY way. You go out and buy a deep-in-the-money vertical bear put debit spread.

This is a matched pair of positions in the options market that will be profitable when the underlying security goes down, sideways, or up small in price over a defined, limited period of time. It is called a “debit spread” because you have to pay money to buy the position instead of receiving a cash credit.

It is the perfect position to have on board during bear markets, which we will almost certainly see by late 2019 or 2020. As my friend Louis Pasteur used to say, “Chance favors the prepared.”

I’ll provide an example of how this works with the United States Treasury Bond Fund (TLT), which we have been selling short nearly twice a month since the bond market peaked in July 2016.

On October 23, 2018, I sent out a Trade Alert that read like this:

Trade Alert - (TLT) - BUY

BUY the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November, 2018 $117-$120 in-the-money vertical BEAR PUT spread at $2.60 or best.

At the time, the (TLT) was trading at $114.64. To add the position, you had to execute the following positions:

Buy 37 November 2018 (TLT) $120 puts at…….………$5.70

Sell short 37 November 2018 (TLT) $117 puts at……..$3.10

Net Cost:………………………….………..………….…............$2.60

Potential Profit: $3.00 - $2.60 = $0.40

(37 X 100 X $0.40) = $1,480 or 11.11% in 18 trading days.

Here’s the screenshot from my personal trading account showing you where I get the price:

 

This was a bet that the (TLT) would close at or below $117 by the November 16 options expiration day.

The maximum potential value of this position at expiration can be calculated as follows:

+$120 puts
-$117 puts
+$3.00 profit

This means that if the (TLT) stays below $117, the position you bought for $2.60 will become worth $3.00 by November 16.

As it turned out, that was a prescient call. By November 2, or only eight trading days later, the (TLT) had plunged to $112.28. The value of the iShares Barclays 20+ Year Treasury Bond Fund (TLT) November 2018 $117-$120 in-the-money vertical BEAR PUT spread had risen from $2.60 to $2.97.

With 92.5% of the maximum potential profit in hand (37 cents divided by 40 cents), the risk/reward was no longer favorable to carry the position for the remaining ten trading days just to make the last three cents.

I, therefore, sent out another Trade Alert that said the following:

Trade Alert - (TLT) – TAKE PROFITS

SELL the iShares Barclays 20+ Year Treasury Bond Fund (TLT)November, 2018 $117-$120 in-the-money vertical BEAR PUT spread at $2.97 or best

In order to get out of this position, you had to execute the following trades:

Sell 37 November, 2018 (TLT) $120 puts at…………........……$7.80

Buy to cover short 37 November, 2017 (TLT) $117 puts at….$4.83

Net Proceeds:………………………….………..………….…..............$2.97

Profit: $2.99 - $2.60 = $0.37

(37 X 100 X $0.37) = $1,369 or 14.23% in 8 trading days.

 

 

Of course, the key to making money in vertical bear put spreads is market timing. To get the best and most rapid results, you need to buy these at market tops.

If you’re useless at identifying market tops, don’t worry. That’s my job. I’m right about 90% of the time and send out a STOP LOSS Trade Alert very quickly when I’m wrong.

With a recession and bear market just ahead of us, understanding the utility of the vertical bear put debit spread is essential. You’ll be the only guy making money in a falling market. The downside is that your friends will expect you to pick up every dinner check.

But only if they know.

 

Understanding Bear Put Spreads is Crucial in Falling Markets

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