Markets
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Luke Kawa

Strategists sound alarm over silver’s rally, recommend options trades for potential violent reversal

Silver’s ridiculous romp higher in 2025 and at the start of this year is showing some signs of fraying around the edges.

And with just how fierce the move higher has been, strategists are warning of the potential for intense downside as some of the key parts of the fundamental and technical theses for silver are starting to look less solid.

Michael Purves, CEO of Tallbacken Capital Advisors, who’s been bullish on the shiny metal, thinks it’s once again time to hedge long exposure.

On Thursday, he recommended selling $95 strike calls on the iShares Silver Trust that expire in February to purchase $75 strike puts.

Purves previously recommended that clients hedge their silver exposure on December 26 (its 2025 peak) before declaring that the coast was once again clear for longs on December 30.

“It might be surprising to know that speculative long silver futures positions are at 20 month lows, or that Open Interest is at five year lows,” he wrote. “Once again, hedging long positions is in order — particularly given the distorted put-call skew which allows [investors] to sell calls to finance long put positions.”

Viresh Kanabar, an investment strategist at Macro Hive, followed this up on Friday by flagging one of several key changes in the market structure for silver. The physical market tightness, cited by bulls as an important driver behind silver’s skyward ascent, is showing signs of reversing.

“1m forwards on physical silver have flipped back to contango,” he wrote. “This lines up with physical ETF outflows and evidence that high prices are weighing on industrial demand.”

Silver contango

“In short, we are not bullish on silver at these levels, instead, see increasing signs of risks skewing to the downside,” Kanabar added.

David Cervantes, founder of Pinebrook Capital Management, told clients on Thursday that he’s taken a short position in silver by owning put options on SLV with three months to expiry, noting that its outperformance of the stock market over the past 100 and 252 days has reached unprecedented levels.

“THIS IS HIGHLY SPECULATIVE AND A SMALL GAMBLE-SIZED WAGER WILL BE MADE OVER WHICH SLEEP WILL NOT BE LOST,” he emphasized.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

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Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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