1/x I learned a loooong time ago to never fight a well FED Gary 🦍...Despite a long list of reasons to be 🐻’ish, including: 1)Vanna 👸 & Charm 🦥 away @ the 🏖 for an extended vacation, 2) sentiment & positioning historically stretched by almost every metric, 3) a VVIX/VIX ratio
2/x blinking 🚨, 4) earnings season after a massive run calling for what should be some natural profit taking, 5)an imminent Tax season & 1 year anniversary of longs also calling for profit taking selling flows, 6)seasonality waning as we head towards May, 7) & probably most
3/x importantly, a Fed that is more likely than expected to begin walking back its ultra loose rhetoric, as we continue to see upside surprises in NFP, earnings, & a dramatic acceleration in vaccination + a reopening of the domestic economy. But despite all of these, the SPX
4/x can hardly venture anything more than vaguely slowing momentum... that said, the 🪟 for ⚠️ is here & it pays to lean 🐻’ish, just NOT w/ long local SPX puts or VIX calls, at least not until we see a closing break of the 20 day. Instead the play is, as is often the case when
5/x Gary🦍 is this well FED, Dispersion. In particular, w/poor breadth & waning retail support in IWM & NDX (vs strong breadth in SPX) the play is continued hedges in these complexes versus short downside IVol in SPX...also, w/ a floor developing in SPX IVol & a cheap event Vol
6/x emerging in 4/28 w/an under appreciated coming FeD meeting, & long awaited, Biden address to a joint session of Congress, (a $26 1 day SPX straddle for the FED, & similar for Biden SOTU) NTM Tech earnings, the other trade is to continue to buy calendar spreads in SPX,selling
7/x 4/26 Ivol to buy 4/28 Ivol & later. Both of these events that are only 1.5-2 weeks out have the potential to be make big 🌊 in what has been a complacent backdrop...as mentioned, the Fed’s Bullard has already floated the idea that a taper conversation should begin when 75% of
8/x the population vaccinated, & all signs point to this occurring sometime before mid June, opening up the June 16th Fed meeting as a potential surprise change in rhetoric/policy. This paired w/a general whistling by the graveyard at play in markets, for a Biden admin
9/x that is likely to accelerate a vocal hard line towards issues like China’s 🇨🇳 human rights abuses & tech antitrust policy, as he begins to move past the Covid focus to broader policy initiatives...watch NDX/IWM for leadership to the downside. listen closely to Fed speakers
10/x & 👀 rates like a 🦅. 👂 to Biden surrogates for clues re: coming SOTU initiatives, particularly regarding antitrust & China🇨🇳, & most importantly watch Gary. Rising Ivol, if he becomes unFED w/ Fed commentary &/or a break of the 20 day, look out below. He is the only thing
11/x holding the market together in this🪟& starting from a lower level there is even more potential energy for problems as Tail Fragility continues to be high despite local iVol being dramatically oversupplied...& w/skew cheap, it continues to be a no 🧠‘er to own convexity
12/12 funded w/ local ivol. Good night! 😴 & Good luck!🍀 🍀 🍀
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1/x Everybody Panic!!! The number of people coming out & claiming to be ‘Fully hedged’ AFTER today is surprising... This market has been in desperate need of a sentiment reset and a healthy correction in price & time & it seems to be getting Just that.Though we are still 50%
2/x short after monetizing the move down in IWM, we are still long calendars in SPX, long dispersión, & long 3/30 event Vol, while eyeing a couple of days of digestion & increasingly shifting our put calendar exposure to the call side... As stated earlier today, a🪟of weakness
3/x opened 4/12.4140-4175 was hit, as predicted & over a week later, we’re @4120. This is what correction in time/$👀like. Whether we get more $ correction remains to be👀. But remember a🪟is just a🪟. A👸/🦥vacay doesn’t push market⬇️, it removes support & creates vulnerability
1/x Just as Gary’s 🦍positioning reflexively effects the outcome of his bets, I’ve become convinced that my calls are reflexively beginning to effect the outcomes of my predictions... so, I’m gonna keep it🤫tonight. There are simply too many Care Bears crowding my magical 🌈.
2/x Given the trajectory, NDX leadership, strong seasonality, all the late quant flows tied to declining Vol which still have a ways to go, Gary’s dramatic oversupply & the zookeepers still steady supply of🍌’s despite the overwhelming size of the rally relative to IVols,there’s
3/x every reason to believe that all these factors paired w/the fact that now savvy 🥐’s are joining simple minded 🌷’s as 🐻’s, that whatever likely correction we get here, will probably end up only amounting to another choppy short-lived correction in time, Supported over the
1/x per usual, Wed’s update’ll be brief...Vanna’s👸gone. But Gary’s🦍@ the top of his game. & although our🦥is no👸, he’s charming enough when Gary’s well FED, & so, as predicted, here we are @ our projected 4140@ our long projected🪟, & WofFortune is crushing the ratings... But
2/x remember it’s never an easy ride. we’re likely to get some more mowing of the🌷’s & signs of accelerated forced call squeezes across the space before it’s all said & done... If this call squeeze isn’t able to drop kick the🍌🍌 out of Gary’s grasp in the next 1.5 weeks, it’ll
3/x be hard to loosen the grip & turn the tide. Regardless, @ this juncture, gamma is simply too cheap in this🪟& as stated, now that we have hit our objective, it’s time to START accumulating on the upside, gradually replacing stock w/calls or building a delta neutral, short
1/x Here we are @ 4/12. The rally to ATH has transpired as predicted & the VIX has tumbled to 13 month lows. The🪟of weakness has opened & this is where things start to get weird...it’s NEVER straightforward, & imagining how this market will manage to tumble through the🪟begins
2/x to become fairly hard to pinpoint. The truth is, that despite Vanna’s👸part time sched this week & charm’s🦥fading strength as the week goes on, Gary’s still very much in control until the🍌’s get taken away. Any rally to our 4140 *** objective should begin the process
3/x of loosening his grip...& any rally above 4140 toward a 420 spy before 4/20 should only serve to create greater potential energy for a correction in the month to come. Skew in the indices has been shockingly soft given how low IVol has become, NTM particularly in the front of
1/x As we approach our long awaited🪟. It’s important to remember it’s NEVER an Easy Ride...Everything from the last 2 posts this week👇still applies, BUT...The strength of the NDX, the hugging & stretching of the 2 stdev of the 20 day, in the face of 46k lbs of JuneQ 4115 🍌’s
2/x from last week, the overextended retail sentiment & RSI’s, tells us the rally is hungry for more. We still expect the market to squeeze to ~3140 by Mon 4/12. @ 3140 is where things get interesting. w/the🪟open, this is where the market will begin to play🐔to shake the fragile
3/x paper hands & squeeze the last remaining 🌷‘s... So many are looking for this 3140 area to be a potential🔝, that my SPY-dey sense tells me we’ll potentially get a unimaginable stretch to a well deserved 420 SPY sometime before 4/20. My current est sees a potential 🎯
1/x Everything from Monday’s 🥐 Crumbs👇still applies, So I’ll keep this short & jammy...The speed of the rally has been telling. Despite bullish sentiment, a rally beyond the 2stdev up of the 20 day, continued bear steepening, NDX beta adjusted weakness, 🚨RSI’s, this market has
2/x barely flinched... that tells me this market has more work to do on the upside still. This correction in time tells me that the rally was just a little ahead of schedule, but it seems unlikely that the market is going to let all of those late to the party enough time to catch
3/x up to the tour bus. ***4140 sits overhead & Vanna👸& charm 🦥 are slated to host an epic late Friday/Early Monday special edition of the Wheel of Fortune. Gary has gorged himself on🍌& is unlikely to be hungry until at least next week. Sky high ratings could distract