MAGA+T- Speculation...Naaah!
Updated
BLUF: CTA's Long, Option dealers long S&P 500 convexity (FookinGamma) then short, Buy Da DIP, HF's Rebalancing (Huge VOL Spike Today ivo 1130 250K SP Contracts...more coming), FEB OPEX (Covering/Rolling)...WTF!
Word of the Day goes too.....Michael @profplum99
Asness said. “We’ve seen this movie before a few times and we know how, but definitely not when, it ends.” Uhh... no, you haven't and no you don't. One Smartypants rightly correcting another smartypants...LOL! None of us are as smart as we think we are...TBD!
Note: Some are saying several more weeks before KungFluVirus starts to downgrade globally then 10 YR Yields will go back up w/Equities in tow, I don't buy it...this is the BondKings telling the FED lower rates or we will force your hand, oh yea and that "Rising FookinUSD"
There is an "INFLECTION POINT" coming...Situational Awareness, BS Meter is pegged, Spidey-Senses Heightened...be ready for the pivot!
Find-Fix-Finish...see you @ Happy Hour...Cheers! "Have a Plan Folks"!
Word of the Day goes too.....Michael @profplum99
Asness said. “We’ve seen this movie before a few times and we know how, but definitely not when, it ends.” Uhh... no, you haven't and no you don't. One Smartypants rightly correcting another smartypants...LOL! None of us are as smart as we think we are...TBD!
Note: Some are saying several more weeks before KungFluVirus starts to downgrade globally then 10 YR Yields will go back up w/Equities in tow, I don't buy it...this is the BondKings telling the FED lower rates or we will force your hand, oh yea and that "Rising FookinUSD"
There is an "INFLECTION POINT" coming...Situational Awareness, BS Meter is pegged, Spidey-Senses Heightened...be ready for the pivot!
Find-Fix-Finish...see you @ Happy Hour...Cheers! "Have a Plan Folks"!
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AM Futures/Other Indicators...Note
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Watch the 10 YR Yield and USD...They are trying to tell you something....HF will be rebalancing more today w/more contracts covering/rolling...sector rotation...the Environment is changing...Eyes Wide Open!Note
FEB OPEX today...just "Transferring Risk."“Concentration Risk.” Liquidity, Zombie’s, Money Flows, Shorting the future via FookinFrontRunning…Adapt or Die!
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Note:Year-to-date, pretty much EVERYTHING has gone up: SPX, gold, USD, Treasury bonds. Over the past 20 years, when SPX, gold, & USD rallied >2% over 1.5 months while 10 year Treasury yield fell (bonds rallied), SPX always fell over the next 2 weeks.Note
Seth Golden...The ratio of the S&P 500 technology to energy sector is now the same as during the tech bubble. Signs that certain segments of tech are trading at unsustainable valuations are supported by the record level of speculative call option activity and outsized gains in certain tech stocks (Figure 2). How was this factor bubble inflated? While this could be a topic for another report (or a book), in short it was driven by central banks pushing global yields into negative territory (propping up defensive and secular growth/tech bond proxies), growth of passive indexation and momentum strategies (pushing assets into momentum, mega caps and low volatility stocks) as well as flows based on simplistic ESG schemes that just exponentiate the same crowding trends (e.g. very high correlation of ESG with low volatility, large size and momentum scores as well as sector concentration in tech). Value stocks are typically on the other side of all of these trends that inflated this bubble. We caution investors that this bubble will likely collapse, i.e. this time is not ‘different’, with valuations reverting closer to 2010-2020 average.Note
Seth G again...Finally, it is worth noting the high level of speculative retail activity, typically chasing the upside in popular high momentum tech stocks (e.g. based on retail brokerage activity data, and call option volumes in Figure 2 above).Note
Have fun today folks....FEB OPEX today...gonna be a wild one again!Process...Manage your Trades...have a Plan! Cheers...See you next week!
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Just listened to a great podcast w?Raoul Pal and Jeff Greene...Something to think about....Increased Liquidity leads to Increased Wages...Wages Increase then Cost's Increase...Questions is where are we in the cycle? What are the limits? How do the feedback loops work and what makes them NOT work? Ebbs and Flows...always looking to get back near equilibrium....things to think about!
Always Learning...No one has all the answers...Know the environment we are in...TBD.
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–Clarida yesterday said he doesn’t really think the markets expect a cut, yet every treasury maturity except 30’s is below IOER. FFG0/FFG1 closed -41.25, pricing nearly 2 eases this year. The Fed’s refusal to endorse rate cuts is helping to flatten the curve.–Equities are becoming a bit more volatile with VIX closing 16.81. The high print at the end of Jan was 20. Risk-off Friday likely.
chartpoint.com/the-fed-balks-at-rate-cuts-that-trump-and-the-markets-want/
Note
UST 10yr Yield 1.45-1.62% (bearish)USD 98.30-99.98 (bullish)
SPX 3330-3402 (bullish)
RUT 1675-1705 (bearish)
Utilities (XLU) 68.38-71.62 (bullish)
REITS (VNQ) 96.00-100.94 (bullish)
Consumer Staples (XLP) 63.98-65.23 (bullish)
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"I would note that this reduction in total gamma is certainly concerning and does not support the bull case, it seems that the market has been consistently adding back hedges which increases negative gamma. Because of the size at 3375 expiring today gamma levels could shift in pretty decent size, making it a bit tough to predict post OPEX levels. At the moment it does appear the stage is set for some decent volatility."
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