Thread by @jam_croissant

1/x The moment of truth is upon us... As the market is prone to do, it has rallied to the most critical point & is forcing all but the most resolute 🐻 out of their positions, just as it did w/ the bulls @ the 1 stddev down of the 20 day that we highlighted several weeks ago.

https://twitter.com/jam_croissant/status/1370305412742922243

2/x So, for the next couple of days, until quarterly Vixperation, we’ll likely continue to see the markets play a new game of 🐔 w/ our (several months ago called) ATH in March futures of ***3957, which we have once again rejected overnight... as mentioned last

3/x week:the tug-o-war of whether or not we are going to get the blow off top before the decline is on the verge of being decided with this level in the next several days...Be patient. We’ll know a lot more very soon. As we resolve this important inflection point.The price action

4/x b/w now & Vixperation will tell us all we need to know. A healthy close above these ATH & we’ll likely be off to the races (4250-4300?) But a Failure to breach that by 3/17 would likely send us 🛗⬇️... It’s never easy. Rules are rules. We will not be dogmatic, either way.

5/x Instead we will let Flows and price show us their strength, and follow their lead. That said, the technical break of several weeks ago, still looms quite large (yield) in our models, as does the slowing momentum, driven by the underlying weakness coming from

6/x macro flows we have highlighted for months... especially as this market struggles with these ATH’s. If we make new highs, this technical break will have been a notable unfulfilled warning highlighting weakening flows during a 🪟 of strength, that was stabilized & held in

7/x check. However, if we don’t close above by 3/17, we believe all will soon see the importance of this break.... as said on the lows, the positive ST forces were formidable & made for a countertrend rally due to 1)VERY bullish Vanna👸& Charm 🦥 flows 2) Improving seasonality

8/x 3) Strong midterm momentum/trend 4)ST oversold & 5)a healthy pullback of retail exuberance..but all but seasonality will have run it’s course by this Wednesday’s Vixperation/Fed meeting...As retail sentiment has flipped bullish again, the market has flipped from oversold back

9/x to overbought, & its midterm momentum is clearly waning, & soon Vanna & our charming sloth’ll be heading for the beach again.. So, given all this, if the weakness we are seeing persists, the opening🪟of weakness on 3/17 could be particularly

10/x problematic this time around... it should not be lost on anyone that this critical inflection point is occurring on FED day as the market’s primary headwind has been spiking yields, over the last 1.5 months.This makes a ton of sense, as positioning is at extremes in the bond

11/x space, the SLR/Repo issue has yet to be resolved, & the Fed has refused to bend to the will of the markets as of yet to providing relief, seemingly in the desire to reign in some of the excess spec... their guidance on Wed’ll play a critical role in determining the markets

12/x direction for the next month, making gamma for the event & the coming window of weakness in our view incredibly cheap. Add to the Fed, the risks associated w/long awaited clarity that should come in the coming weeks w/ the onslaught of critical policy directives related

13/x to a/antitrust action b/China policy c/ & of course the touted $multi trillion infrastructure plan that should flow from the White House, now that the stimulus bill & impeachment trials are finally out of the way.... Not to Mention, the well documented risks of coming

14/x EOQ negative flows coming from the rebalancing of some of the TINA effect in various automated strategies like Risk parity... Until 3/17 EOD Gary continues to be well FED and should continue to chop sideways, but watch our long discussed, ‘sell the news catalyst

15/x upon the expected spring reopening..RATES. Not surprisingly, the bear steepening continues, punishing the ‘duration trade’ & ultimately could reaccelerate the potential growing tail sitting out in the smoldering ARKK ‘doomsday
machine’ & connected leveraged trades like TSLA

16/x In the end these are the flows that really matter. So, watch them and our important levels like a hawk. Stinky checks will be hitting accounts this week so also watch retail flows for clues to their effects. If we find our footing & the Fed piles on on Wed to push us higher

17/x though, we will ride it for would could be a real convex move to the upside, but be aware next month, GOING INTO A ⚠️ 5 Week Cycle window of weakness we will be very watchful for whatever might have been missed in March, as 1)Taxes due in a month

18/x in mid April, 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

19/x even more $$$ from 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 likely the prototypical SELL THE NEWS EVENT, if it hasn’t already started

20/x in March already. Be watchful for the announcement of Biden’s SOTU to be scheduled in the next week, we’ll be a buyer of that Vol, as the trends invoked from these announcements could have secular legs, especially in a stimmy tendie driven meme stonk world 🚀again,

21/x so look to those log awaited trades that have been delayed by the stim bill & impeachment...+ clean energy infrastructure, - big tech antitrust, - China centric names as he likely takes a harder line on human rights there, as he needs to find common ground to reach across

22/x the aisle & the country... Lastly, continue to listen to not only what the Fed is saying, but what they 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

23/x and stretched positioning evident in the repo market... they usually get what they want. We will continue to digest Vol for 2 days and then convert to Long gamma, short Vega again as well as long upside calls, hedged delta neutral, initiated at our post Vanna buy times.

24/x Look for post morning 👸 & 🦥 strength to give way to brief weakness. We’ll also be opportunistically m adding cheap convexity funded by 3/15-17 IVol theta for a few days. Good Luck!!!🍀 🍀 🍀