1/x This market’s been in a protracted tug-o-war for 1.5 months, as we sit here playing🐔w/ the, long highlighted, 1 std dev down of the 20 day In ETH once again..This 1st occurred 1/29 w/the ‘memeltdown’. Now we’re seeing it again for the 3rd x in<2 wks. As I’ve discussed before
2/x spending this kind of time in this weak technical, during what should otherwise be a🪟of: 1)VERY bullish Vanna & Charm flows 2) Improving seasonality 3) Strong midterm momentum/trend 4)ST oversold & 5)a healthy repair of retail bullish over positioning is a ⚠️sign, speaks to
3/x how poor all the other critical structural macro flows have been...Price is truth, & momentum is seriously flagging despite other flows for the 1st time since Sept. Hence, the shift in our distributions from a ST bullish ER with 2 sided fat tails, to what appears to have a
4/x narrower distribution with a more negative ER, & w/the same left tail, & a likely opportunity to start selling the the coming rips for stair steps several months sooner than initially thought... that said, in the ST the powerful positive forces that we have long discussed are
5/x still reaching a crescendo this Fri-Mon & should @ a min continue to support any decline as stair steps &, more likely than not, provide us w/ a ST continuation of yesterday’s counter trend rally back b/w the 20 day, & the 1.5 std dev up to be shorted... the primary drivers
6/x of the bearish flows are experiencing are those that we have publicly called for since Aug to likely being the sell the news catalyst upon the expected spring reopening..RATES. Not surprisingly, the bear steepening continues in ETH, punishing the ‘duration trade’ & ultimately
7/x maybe more importantly continuing to activate the potential growing tail sitting out in the ARKK ‘doomsday machine’ & connected leveraged trades like TSLA...not to mention the obvious broad based selling in Risk Parity, + partial removal of the TINA effect. In the end these
8/x are the flows that really matter. So, as the transient Vanna flows, poor retail sentiment, & oversold conditions repair themselves a countertrend rally is likely be relatively short lived, for momo $ leadership is fading & 1)Taxes will come due in a month in mid April,
9/x 2)& it will be time to realize LTGains from last March’s buying... & maybe most importantly 3) the economy should begin to reopen, diverting precious $$$ & attention from retail equity demand back to the real economy while 4)pushing yields & up & diverting even more $$$ from
10/x equities over to bonds...as TINA continues its unwind & 5) teaching many increasingly fundamentally bullish RIA’s once again that the economy is not the market, making it the prototypical SELL THE NEWS EVENT... In the meantime, it is time to play for a bit of continued mean
11/x reversion to the 20 day in the next few days. Stimulus is on the way soon, so it will be interesting to see what kind of effect that has... as we have seen the call buying in the NDX complex if bought in the context of flagging momentum can serve to re emphasize the rotation
12/x away from these names via neg Vanna flows, as much as It can still continue to cause idiosyncratic gamma moves in concentrated meme stonks... Be watchful for the announcement of Biden’s SOTU to be scheduled in the next couple weeks now that stimulus is set to be announced,
13/x the trends invoked from these announcements could have secular legs, especially in a tendie driven meme stink world 🚀again, so look to those log awaited trades that have been delayed by the stim bill & impeachment...+ clean energy infrastructure, - big tech antitrust(made
14/x clear w/aptmnt of TimWu over the weekend), - China centric names as he likely takes a harder line on human rights there, as he needs to find common ground to reach across the aisle & the country... Lastly, continue to listen to not only what the Fed is saying, but what they
15/x are NOT saying. As they continue to seem to want to stem the speculative fervor in the market as they have been unwilling to come quickly to the aid of low liquidity and stretched positioning evident in the repo market... they usually get what they want. Long gamma, short
16/17 Vega, is still the game, particularly on the upside initiated at our post Vanna buy times. Look for post morning strength to give way to brief weakness, only to be bought up similar to Friday. I would expect a potential visit back to the 20 day by the end of the week.
17/17 , or at least choppy sideways support. As the trend should now be eventually sold as we get to 3/17. Own cheap convexity. Good Luck!🍀
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