SUNDAY reading material...its a long one stay tuned for great inisghts... author @ManSherv

Structural Selloff vs Fear Selloff ...lets start with the FEAR sell off
Correction in Time vs Correction in Price

What we seeing here since Wed morning into Friday close is Structural sell off and its a huge difference between this and a fearful selloff that we saw back in March...
Obv there are so many opinions out there, a lot of folks I see
talking bear market lool so there is a definition for a bear market and that definition is deep and complex...
Right now what we seeing here is the combination of different Macro and Micro events which started all the way back from September 2020 and that the major shift in the
market, a shift thats finally taking place after more than 10 + years

What is fearful selloff?

SPX Image
QQQ Image
IWM Image
GLD Image
BTC Image
TLT Image
DXY
As everybody out there selling everything they have and going DXY... The only safe heaven in fearzone is US Dollar, so thats what happened Image
Lets look at the volume on SPY QQQ TLT post March lows ImageImageImage
Fearful selloff doesn't happen often
We had 6 events in the last 13 years which 2 of them (2007-2009) and (2020) was the major bear markets with major corrections the ohters were mini reset a long the way so basic math is: 12/2= 6 events which one of them wasnt a main fear event
Image
What do u see in common in all of these major shifts in the market?
Usually every turning point in the market happened after OPEX day...
A good example is February and March 2020...
Market knew about covid since mid January but didnt care all the way into Feb 2020 Opex...
That was our top, as soon as month rolled over market collapsed why?

Positioning
What do I mean by positioning?
What we see on charts is the result of balance and imbalance mechanism of $ flow and outflow which results in price action and the candles thats being printed on our charts..
Post Opex Feb 2020, majority of positions were not appropriate for such a real fear so the result was massive selling as there was not enough hedge on their books....
This selloff went all the way into March 2020 Opex...
Fed didnt come out with major announcement until Monday after Friday Opex, why? these are not coincident...
As soon March Opex hit and month started to rollover the game changed, why? because they were all hedged up to their neck for the following month so whats gonna happen?
The Vanna effect that I always talk about taking place...
Dealers came into week after Opex being long calls short puts so market didnt have enough grounding so whats gonna happen? as market starts to go lower they losing more and more money on their main position which is (LONG CALLS SHORT PUTS) so their hedge here is to short the
market on any underlying they can find, it could be QQQ it could individual names so this creates that momentum to the downside event (GAMMA NEGAVTIVE OR GAMMA SHORT...) so adding fuel to the fire caused the flush to the downside...
(Remember the world of Options has a main factor thats creating all these moves ((a good example is the ramp ups we see into the bell the last 30 min when Vix is elevated, why is that? as we going into the closing bell that function of time comes into place (decay) so they
have to take profit off of their vix and buy the underlying so that quick move happens which also results on Vix close at low of the day and spx closes at high of the day)
So after the calendar changed into March, market bottomed and Fed came out with announcement now when you have all that hedge sitting on ur book, what does it tell you? A V shape shoot up to the MOON, we at FIT called it in March 2020 and April, the videos out there for anyone
who is new here, why did we make such bold prediction? well it wasnt really a prediction but more of knowing whats happened and what is about to happen due to have that understanding of how things work underneath the market right?
NOW STRUCTURAL SELL OFF

There is calendar with certain dates and times that we are aware of;
Seasonality, breadth, sentiment, vol expiry opex expiry, vol flow and a lot more....
These the small micro stuff that we look into really really give us the edge here so whats happening
now?
We came into this week, Vixpiration on Feb 17th and Opex on Feb 20th...
Vixpiration is always 30 days prior to the next Opex (Feb 17th Vixpiration is 30 days before the March Opex)
We talked about Vix in the last weeks video, If you remember I mentioned there is a chance that Vix goes back and forth above 20 and below but it might take sometimes to become steady and stay below that 20 range...
Why? well 90% of the time dealers market makers are long market
short Vol...

Market is always about supply and demand (Econ 101) and thats true on Vix as well
What happened in Feb March wiped out a lot of Short sellers on Vol now add massive demand by retail thats been bidding up the vol and from institutions as I talked about before
so there is not really any supply when it gets to low 20
and all we have is demand on Vix and Vol overall in different shape and form
An institution lets say JPM, their book always need to be diversified, they used to have Equities Bonds.... but when that correlation is gone what would replace Bonds?
Thats when Vol comes into place...They automatically become a buyer around $20 on Vix, when you have Bonds down
Equities down then you cant use bonds as a hedge so you need an alternative and that alternative is VOL (Vix is SPX Vol, Vxn is NAS Vol and so on)
so this creates huge supply and demand imbalance in the Vol market now add the seasonality weakness, how market is stretched, P/C ratio in equities near all time low so the interest in Vol is going to be there for a good long time and I assume as I showed you in my video last
week, it might take 2-3 years for Vix to get below 15 so what does this tell us?
That market is always hedged up which most likely will prevent from the blow off top that bears waiting for
So coming into Wednesday Feb 17th we knew Vixpiration was going to be 9 am eastern, so I am
going to explain this below as I had numerous questions on this (which also describes my structural selloff point)

A lot of Vol thats been supplied in the market from before including the ones they rolled over post Senate runoff and elections into Feb March was going to get
expired on Wed morning then you have Opex on Friday which also expires lots of futures contracts in the morning on Friday and individual names by the bell so there is lots of hedges coming off of their books which also means all that vanna and charm
that was causing the ramp ups going to be gone....
What do I mean?

Dealers are short puts long calls coming into this week (GAMMA LONG) so when they are in that Gamma positive (gamma long) positions (remember those inflection points I talk about everyday) and coming into the
Vixpiration and Opex weeks that Vanna impact will be gone for quite some time (that window of weakness I been saying from Feb 17th into March 4th)
Because when dealers are long calls and short puts and stocks, what would happen is in any other day before expiration, when market goes lower they always become a buyer of the underlying stocks (to hedge their main position long calls short puts) + when we see Vix elevated, they
start to take profit off of that and bring that $ into indexes and equities but on and after the expiry dates none of these forces exist anymore and that buying support not going to be around until the next Vol inflow which will be sometimes after March 1-4th...
So this is one reason I was anticipating for the weakness as that support which is been a MAIN support will be gone for almost 14 days (the only support thats remained now is Gamma and thats it)
Now u have bonds selloff and yiled rising and how Feb is really a weak month, all this was another reason for them to take a chance and start to hit TSLA with that structural puts buying ($20 for the 3 to 4 exp dates) to try their chances one more time to push it down and we
know TSLA vol really has an impact on SPX so these are all STRUCTURAL PLANNING DUE TO THE REASONS I EXPLAINED ABOVE WHICH IS REALLY DIFFERENT THAN THE ONES WE HAD IN FEB MARCH SELLOFF
And remember market is all about the forces and how these forces ($inflow $outlfow through diff instruments which could be Stocks or Bonds or Commodities or Vol) and how they dominate each others creating all the prints in charts which eventually result in profits
and losses for every single player out there) So when Vanna is not there anymore due to expiration and all of the other reasons I explained that window of weakness is opened so what about now?
This window is short and usually take 12-14 days and why am I sure this is 99% BTD because again based on the Micro and calendar that we have and how seasonality is changing...
Let me explain below
Biden still hasnt had his Union Speech (which is again strategic and panned) + seasonality will be changed once we get out of Feb into March Opex + 2 massive Stimulus packages (Relief and Infrastructure) will about to hit + Institutions all eyeing inflationary plays due to the
Macro and Micro dynamics and XLE the only major sector which is lagging a lot and big boys still mad short on the sector and they will each need on avg to buy $20-$30 bil NET on XLE into March quadwitching...
They will be giving out those $1400s when we are out of the weak seasonality and Biden wont be giving his date on state of union until they notify him about the right date as they all connected...
Having Vaccines and re opening globally all add to the narrative of our story so going into next week we STILL NEED TO BE CAUTIOUS AND RESPECT THOSE LEVELS WE HAVE ON OUR INDICES, IF THOSE LEVELS TAKEN OFF AND BROKE DOWN, BTD IS OUT OF THE WINDOW AND THE GAME PLAN WILL SHIFT
DRASTICALLY BUT AS LONG AS BULLS HOLD ON TO THOSE LEVELS, THIS WILL BE THE BTFD FOR THE REOPENING NAMES BULL RUN (ESP XLE SQUEEZE) INTO MARCH APRIL
Breaking the 2ndDev LBB and staying below it for 2 days back to back everything changes
Watching TSLA and BTC at the same time
Watching US10Y and US30Y and NAS strength...
I need NAS to hold in order for the market to keep its core strength not because I want to play NAS and
tech names personally as I do believe there is massive amount of opportunities in other sectors as I explained but in order for the market to keep it together we need NAS to show strength and at least goes side way
I am eyeing 3870 as our ground support which is also aligns with
.382 retracement

MBB

Gamma Inflection point
Unless we break below the 2ndStdDev LBB and stay below there for 2-3 days, this is the BTD for the massive squeeze into March April
If you stayed for the whole thread, you are serious about becoming or already are a professional who invests in themselves

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More from @FitradersRick

23 Feb
1/5 message i shared with the Fam today...might mean something to you as well;

trading is a non stop journey on self reflection... money is a major factor in life and when we put our life savings on the table in a manner in which we can win or lose, our emotions are
2/5 in for one hell of a ride.
Euphoria at the highs, Despair at the lows
How can we just remain calm and processional throughout?
I GO BACK TO THE WAY I TRY TO TEACH EVEYRONE...HOPE FEAR GREED REGRET...40-60...HIGHER LOWS, Marathon not a sprint
3/5 If you factor in all of those teachings, and then combine it with fundamental awareness and and technical analysis, why cant you be a professional and beat the system time and time again?
The answer simply is "EXPEREINCE" I have a lot of scars on this body, some real
Read 5 tweets
23 Oct 19
Sharing some reflection...I started a "service" over a year ago...going to share the why, what and where I am today. For years I was trading from my Time working at BMO.. in my circle people always came to me for stock information, thoughts etc... (1/2)
I shared everything with those around me, changed many lives and for those they are forever grateful and I fulfilled to have helped change some lives. I come from humble upbringing, parents immigrating here from a foreign country not speaking the language real challenges (2/3)
my dad never spoke the language and worked 3 cleaning jobs day and night to give his kids a better life than he had...Imagine today moving to a country not knowing the language working 3 jobs to give ur kids a better life...thats real sacrifice and thats courage (3/4)
Read 16 tweets

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