Good Morning! Yesterday's GDP number was decent, starting markets higher that were driven thereafter by 0DTE flows. Today, the "Fed preferred inflation gauge" is demanding only a $32 straddle price, $1 more than GDP and in line with typical daily prices.
In other words, the market doesn't seem to care. This simultaneously makes the market unhedged and more dangerous, but also that this event is not a concern to traders,y and event vol has been well priced recently. I do see a lot of concern in financial and social media...
But to get the real concern, the straddle price is the more accurate gauge. If you feel the event is more significant, you may have an edge, but more likely you have a bias. Event vol rarely misprices the event.
#volland is showing the same bullish formation...
#volland is showing the same bullish formation...
And is now working through the hardest part of the advance. Up to 4150, there is positive gamma and negative vanna to advance, which suggests we are approaching the top. The FOMC catalyst can change that next week, as FCI has skyrocketed recently, something JPow doesn't want.
But markets have increasingly not believed JPow's rhetoric and believe he will start lowering rates at some point, something no FOMC governor has indicated. "Don't fight the Fed" is a popular mantra, yet the market is doing just that. Until then, #volland is showing resistance,
But a vol-up or neutral environment and strong 0DTE flows could forge markets higher, although slower. 4150 would be the area for a blow-off top over the next few weeks with a drop past 4000 being a sign a short-term top is in.
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