Thread by @SenesLULZ

Market Commentary-
Disclaimer: I don't claim to know everything, as I have MUCH MORE learning left to do.
That said, I think beginners need to see bigger 🖼️ of markets instead of thinking ⬆️⬇️
#SPY , #SPX , #ES
ELI5 friendly. Info derived from @jam_croissant
See below:

1/
Market has gone essentially NOWHERE from November 10th onwards. We've been stuck in a range anywhere from 3850 - 4100 on $SPX (~385 - ~410 $SPY) for the past month. A day trader's dream.

A perma 🐻 and perma 🐂worst nightmare.
Indecisive, rangebound, sideways market.
⬆️⬇️?

2/
What if I told you that there's a structural "method behind the madness?"
That structure is 🦍 aka "Gary" aka Dealers/MM (and in this context: specific to implied vol positioning)!
Now, you may be asking:
"WTF does that have to do with markets being in a range?"
EVERYTHING.

3/
In a previous thread, I had mentioned that the🥐 had an underappreciated statement:
"People ask me about direction all the time. Are markets going up? Down?
Well, vol compression is technically a direction as well."

Vol compression = due to OVERSUPPLY of vol.
🍌🍌🍌

4/
When 🦍 has loads of 🍌🍌🍌 (as is the case currently due to HUGE quarterly Dec OPEX and JPM magnet), there is a dampening of volatility both to the upside and to the downside.
Thus, there is a very LOW likelihood of markets breaking out in any meaningful way either⬆️OR ⬇️.

5/
This was best illustrated in the Tuesday CPI release, where markets gapped up tremendously - even past the 2std > 20d sma! Only, to be shot right back down to close right near the 20d sma.
That was 🦍!
Won't delve too deep, but 🦍 is currently long gamma.

"Ok and?"

6/
When 🦍is long gamma, he STFR and BTFD. This is what reflexive pinning 📌 is:
Keeping markets (specifically indices) relatively in check/supported.
The only way to become unpinned is to take away his 🍌🍌🍌, specifically in a time when he doesn't have a lot of supply.

7/
Well guess when he’s most FED/supplied?
OPEX and quarterly OPEX dates!
And what time frame we are in now?
😉
You guessed it - in the most FED 🦍time.
The other participants like 👸+🦥are very important as well, but for the sideways indices we've seen, I'd say primarily 🦍.

8/
In today's FOMC podcast, the 🥐mentioned that we'll likely see more of this push and pull because of the context of seasonality actually going in the opposite direction of normal years (bc this is a down year) - due to tax selling, etc.

So we can't just expect🆙 only c/o🎅.

9/
That said, coming OUT of OPEX, we may see some increased volatility as these 🍌🍌🍌 naturally get taken away from Gary in the next couple weeks.

Price will give us a clue as to whether those 🍌🍌🍌may be taken away earlier.

10/
He specifically called for calendar expansion.

"WTF is calendar expansion?"
-When implied vol further out in ⏲️ will likely perform better than those nearer term.

Expectation being that vol still likely won’t perform well the next couple days.

11/
"So what does this mean for us?"
"Are we going to go up or down tomorrow?"
Perma 🐻and 🐂alike are licking their chops waiting for the answer.

Idk.
Fin :)

12/
On a serious note:
yes, I don't know which direction necessarily, but what I DO KNOW is this:
A crash is STILL VERY VERY VERY UNLIKELY outside of a tail event.

Thanks for reading.
Please correct me on any mistakes if you do ever read this master @jam_croissant .