Cisco's Expected Move Was $9. The Stock Moved Almost Double.

Cisco's expected move yesterday was $9. The stock moved almost $18. That's a two standard deviation move — and the chart is a wall.

A few days ago, Cisco and Intel both took out highs they hadn't seen since March of 2000. Twenty-six years ago.

I was a young buck back then. I remember what this kind of move looked like the first time.

Most traders are looking at Cisco and Intel right now and thinking these are fundamental stories. They're not. They're mechanical ones.

Now to be fair, these tech stocks actually make money. That's the part where it's unfair to compare to the original internet bubble.

But the mechanics underneath the moves are the same thing in a new costume. Dealers get short call exposure as customers buy upside. They buy the underlying to stay flat.

The price runs to the next strike, the short gamma compounds, dealers buy more. The move accelerates because the hedge requires it.

The squeeze existed 26 years ago. What's different now is the speed.

Algorithms are hitting it and hitting it. That's how a $9 expected move turns into almost $18 in a single session.

Mechanical moves don't roll over because the fundamental story changes. They roll over when the order flow on the other side starts piling in. That's the only thing worth watching here — not the top, the flip.

Does that mean short Cisco today? No. The risk-reward doesn't justify it yet.

The same gamma machinery that's driven this run will keep driving it as long as the order flow keeps coming in one direction. The moment to step in front is when that flow slows, not before.

Right now, all of this is a chocolate-covered hand grenade. It may go off this week. It may sit on the table for two more.

Your job isn't to predict which one. It's to know what kind of move you're looking at, so when the pin pulls, you're not the last one in the room still buying.

The flip is coming. Could be this week, could be two more — but when it happens, it'll be sudden. That's how mechanical moves end.

The expected move will tell you it's happening before the chart does. By the time the chart confirms it, you're already late.

If you want to know how I’m trading this market the best way to do that is to book a 15 minute call with my team. They’ll tell you what I’m doing and which service best fits your trading needs. 

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To your success,

Don Kaufman