1/x so here we are after 2 weeks of a 🐌’s pace, correction in ⏰. The🪟is closing & our🐌is now primed for liftoff. As I explained last Sun night, the markets had every reason to decline in this🪟already. But it hasn’t even played🐔. Despite a long list of reasons to be🐻’ish,
2/x including: 1)Vanna👸&Charm🦥 away @ the 🏖 for an extended vacay, 2) sentiment/positioning historically stretched by almost every metric, 3) a VVIX/VIX ratio blinking🚨, 4)earnings season after a massive run calling for what should be some natural profit taking 5)an imminent
3/x Tax season & 1 year anniversary of longs also calling for profit taking selling flows, 6)seasonality waning as we head towards May 7)& most importantly, a Fed that’s more likely than expected to begin walking back its ultra loose rhetoric, as we continue to see upside
4/x surprises in NFP, earnings, & a dramatic acceleration in vaccination+a reopening of the domestic economy. But despite all of these, the SPX hardly ventured anything.Instead the play was, as we suggested last week, dispersion. Our hedges in RTY &NDX doomsday names versus short
5/x downside IVol in SPX crushed it. as did our recommended calendars, w/ a new floor @ 16 VIX in SPX IVol & cheap event Vol for 4/28-4/30 also killing it. Now comes the moment of truth. Will the market finally try & shake all the bulls & test the 20 day for its long awaited game
6/x of🐔right as the🪟closes on 4/28-4/30? Or will it continue to see the writing on the wall and attempt to front run the outcome altogether out of the shoot 1st thing on Mon morning as bull markets are prone to do? Either way, as we’ve said repeatedly for weeks.⏰ is NOT a 🐻’s
7/x friend, & @ this point it pays to look to BTD w/ a closing🛑below the 20 day. Especially, w/the 20 day rising to our well trodden 4120 area support by Fed day & Gary🦍still over supplied & Vanna on her way back late 4/30, the odds say a buy signal is likely coming either way
8/x the #1 scenario that gives me the most pause, is a front-run rally that climbs so fast through the Fed meeting, that we get a potential Ivol increase & whipsaw w/overreaches in sentiment that drive Instability, while we are still in the🪟. So, as much as we are still rooting
9/x for a Last minute break of the 20 day...Price is truth. & Gary🦍has been absolutely in Oscar form as he has single handedly led The Wheel of Fortune cast to some of its best ratings in years without Vanna or Charm for weeks. More than ever this is a week to own vertical call
10/10 spreads for long gamma w/ short strikes struck around 4250. Watch rates, be my friends. 4226-4240 *** feels like a 🧲 @ this point by 4/30. Assuming we make it out of the 🪟 unscathed, the coast should be clear again for New ATH & premia melt until 5/19 Good luck!!🍀
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1/x A short & sweet midweek 🥐... Everything from Mon👇 still applies. Despite every reason to see a price decline, Gary 🦍, Vanna 👸, & Charm 🦥 have other plans. SPX IVol is getting the💩squeezed out of it. With the 1 day event straddle at only $20 w/ Fed & SOTU tomorrow,
2/x Dealers are playing ‘Hot Crossed Buns’ w/anything w/theta. Don’t fight a well FED🦍, especially when the zookeepers are entering the cages🍌in hand...Don’t do it. regardless of the fundamentals, or the narrative, or the technicals, or the sentiment, or the positioning...’
3/x especially as The🪟is closing & Vanna👸& Our charming 🦥 are packing their bags, ready to return from the 🏖 & add a little well rested summer support...Unless The Zoo keepers decide to wreak havoc & take the🍌’s away, dispersión is the play.
1/x This will be a short daily 🥐...everything from Wed still applies 👇. 🪟of weakness opened 4/12 w/ 4140 *** hit. & Here we are @ 4140 after almost 2 weeks! all things considered, this is a victory for the bulls, considering👸& 🦥 are @ 🏖, & it is a tribute to the power of a
2/x well FED Gary🦍. This is a textbook correction in⏰. But The🪟’s still open. Whether we get more of a price correction remains to be👀.Remember a🪟is just a🪟.A👸/🦥vacay doesn’t push market⬇️, it removes support & creates vulnerability..but time is running out for the 🐻’s.
3/x A decline to the 20 day for a last minute game of🐔to shake the longs would be an ideal Mon- Wed activity, but unless someone can manage to take away Gary’s🍌🍌 & make him hangry enough to lose control/ start breaking things following the Fed meeting & SoTU...I would expect
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 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
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