Happy LORD's Day brothers and sisters!
"Giga 🐂 idiot" here w/ early gift bc tmr SUPER BOWL!
Next week surely is NOT as easy as every FinTwit furu wants you to believe.
So many differences in opinions/analyses...
Let's try to think about this critically 🥐style.
See below 🧵:
"Giga 🐂 idiot" here w/ early gift bc tmr SUPER BOWL!
Next week surely is NOT as easy as every FinTwit furu wants you to believe.
So many differences in opinions/analyses...
Let's try to think about this critically 🥐style.
See below 🧵:
1/
Recap:
Mostly everything 🥐talked about, has played out for the past couple months. More recently, we've squeezed shorts heavily into an area that once was thought unreachable (past the MOAT, 200d sma).
However, the FED was hellbent on preventing moar...
Recap:
Mostly everything 🥐talked about, has played out for the past couple months. More recently, we've squeezed shorts heavily into an area that once was thought unreachable (past the MOAT, 200d sma).
However, the FED was hellbent on preventing moar...
2/
After JPOW nothing burger, which propped up equities back to ~4190, numerous FED speakers came out and all reiterated essentially the H4L (coined by dampedspring - follow him, won't tag bc of notifs) "Higher For Longer" rhetoric.
Equities responded in turn ⬇️.
After JPOW nothing burger, which propped up equities back to ~4190, numerous FED speakers came out and all reiterated essentially the H4L (coined by dampedspring - follow him, won't tag bc of notifs) "Higher For Longer" rhetoric.
Equities responded in turn ⬇️.
3/
VIX shot back up to 20 handle, DXY went hugging upper bound of its downtrend line, 10y ripping back up (all negative correlators with equities, amongst others).
And even in the midst of Peak 👸🦥flows, equities showed some late week weakness.
VIX shot back up to 20 handle, DXY went hugging upper bound of its downtrend line, 10y ripping back up (all negative correlators with equities, amongst others).
https://twitter.com/TickerWizards/status/1623792177074565121?s=20&t=1pQ35TMMcF3dJml-JjBQ4A
And even in the midst of Peak 👸🦥flows, equities showed some late week weakness.
4/
YET, the 20d sma was not breached lower on a CLOSED basis.
Nor did it reach the 1 std < 20d.
These markers such as the 20d, 1std > / < serve as important markers for certain trend following and vol targeting strategies.
YET, the 20d sma was not breached lower on a CLOSED basis.
https://twitter.com/SenesLULZ/status/1621678712663212033?s=20&t=kd5ilIynxL89kyH6jASeaQ
Nor did it reach the 1 std < 20d.
These markers such as the 20d, 1std > / < serve as important markers for certain trend following and vol targeting strategies.
5/
Bulls needed to maintain the 20d sma on close to sustain the current uptrend.
They succeeded. And despite a whole HOST of issues that could and should have pushed markets lower, we instead saw stair steps down.
People asked where 👸+🦥were.
"Thought it was peak week!"
Bulls needed to maintain the 20d sma on close to sustain the current uptrend.
They succeeded. And despite a whole HOST of issues that could and should have pushed markets lower, we instead saw stair steps down.
People asked where 👸+🦥were.
"Thought it was peak week!"
6/
They were there! If it weren't for these supportive flows, I'd argue that markets would have gone down in a much more abrupt fashion INSTEAD of these stair steps down.
That's Vanna and Charm at work!
Now, these flows come to a climax Monday/Tuesday.
HOWEVER...
They were there! If it weren't for these supportive flows, I'd argue that markets would have gone down in a much more abrupt fashion INSTEAD of these stair steps down.
That's Vanna and Charm at work!
Now, these flows come to a climax Monday/Tuesday.
HOWEVER...
7/
We all know what we have coming up don't we?
The ever-so-ANTICIPATED RISK in CPI come 02/14/23.
And guess what's been bid up in light of this huge event?
Vol....
See t1alpha vol term structure.
We all know what we have coming up don't we?
The ever-so-ANTICIPATED RISK in CPI come 02/14/23.
And guess what's been bid up in light of this huge event?
Vol....
See t1alpha vol term structure.
8/
If y'all remember a couple weeks ago, I posted about FOMC and its respective vol structure.
The same thing applies here.
Anticipation/risk is high coming into CPI. So what do people do? Prepare for worst case scenario.
But if numbers come in meh… 👀
If y'all remember a couple weeks ago, I posted about FOMC and its respective vol structure.
https://twitter.com/SenesLULZ/status/1620458724119953410?s=20&t=IHr1gDSh4vjGusvvpMICVg
The same thing applies here.
Anticipation/risk is high coming into CPI. So what do people do? Prepare for worst case scenario.
But if numbers come in meh… 👀
9/
Now is it really THAT SIMPLE?
Should we just btfd Monday (if there is one) and hold til Tuesday?
Bc event vol is bid so high, markets will go uppy NO matter what?
Well, we don't know... It's a high risk gamble.
Me personally, I'm scaled into longs bc I feel CPI will be meh.
Now is it really THAT SIMPLE?
Should we just btfd Monday (if there is one) and hold til Tuesday?
Bc event vol is bid so high, markets will go uppy NO matter what?
Well, we don't know... It's a high risk gamble.
Me personally, I'm scaled into longs bc I feel CPI will be meh.
10/
If it comes out hot, then we have to respect what participants have feared: that JPOW will raise rates H4L.
Equities will NOT like this and it may result in a sell-off that could be exacerbated by CTAs (trend followers).
They have LOTS to sell...
If it comes out hot, then we have to respect what participants have feared: that JPOW will raise rates H4L.
Equities will NOT like this and it may result in a sell-off that could be exacerbated by CTAs (trend followers).
https://twitter.com/ShervMann/status/1623828462891925505?s=20&t=DRGTxCSM81oOmMTbvCiLFg
They have LOTS to sell...
11/
ON TOP OF THAT, we have the ICAHN trade that has been talked about as of late.
~$5b notional trade of ES 4050 puts for 02/17/23.
Won't rehash details here, read this thread:
If this market catches downside momentum < 4050, you have:
ON TOP OF THAT, we have the ICAHN trade that has been talked about as of late.
~$5b notional trade of ES 4050 puts for 02/17/23.
Won't rehash details here, read this thread:
https://twitter.com/SenesLULZ/status/1623392644109078528?s=20&t=DRGTxCSM81oOmMTbvCiLFg
If this market catches downside momentum < 4050, you have:
12/
-CTA flows in the hundreds of BILLIONS to sell
-other trend following, vol targeting strategies
-dealer negative gamma exacerbating downside moves
Add to that 02/15/23 VIXpiry where vol compression rolls off.
ALL contributing against the 🐂case this time.
This is concerning!
-CTA flows in the hundreds of BILLIONS to sell
-other trend following, vol targeting strategies
-dealer negative gamma exacerbating downside moves
Add to that 02/15/23 VIXpiry where vol compression rolls off.
ALL contributing against the 🐂case this time.
This is concerning!
13/
Now, we have to remain objective though.
IF markets do NOT liquidate past that strike and we stay afloat, those $5b notional of ES short deltas have to be bought back.
Which does what to vol... more vol compression = supportive flows for markets!
Now, we have to remain objective though.
IF markets do NOT liquidate past that strike and we stay afloat, those $5b notional of ES short deltas have to be bought back.
Which does what to vol... more vol compression = supportive flows for markets!
14/
If that's the case, then 🐻would have a hard time reversing this uptrend b/c the aforementioned flows in
-CTA
-other trend following/vol targeting strats, etc..
-dealer short delta unwind
all working AGAINST them even despite the 🪟 of non-💪opening from 02/15-02/17.
If that's the case, then 🐻would have a hard time reversing this uptrend b/c the aforementioned flows in
-CTA
-other trend following/vol targeting strats, etc..
-dealer short delta unwind
all working AGAINST them even despite the 🪟 of non-💪opening from 02/15-02/17.
15/
Practically speaking, it still boils down to that 20d sma on close. At the VERY minimum, bears want to close past the 20d sma by Friday with force... Monday at the latest.
Otherwise, it's the same old cycle on repeat.
⏲️is not a 🐻friend.
This adage ALWAYS holds true ^
Practically speaking, it still boils down to that 20d sma on close. At the VERY minimum, bears want to close past the 20d sma by Friday with force... Monday at the latest.
Otherwise, it's the same old cycle on repeat.
⏲️is not a 🐻friend.
This adage ALWAYS holds true ^
16/
If this vol event were to occur, you would want to see a severe downside reaction to occur IN the window of non-strength: which is essentially FULLY from
FRI OPEX ---> Friday following the week of OPEX.
Otherwise, Vanna and Charm flows will mute downside (like this wk).
If this vol event were to occur, you would want to see a severe downside reaction to occur IN the window of non-strength: which is essentially FULLY from
FRI OPEX ---> Friday following the week of OPEX.
Otherwise, Vanna and Charm flows will mute downside (like this wk).
17/
And any correction that would come would serve to just be another digestion or a correction in time and price (letting time/the trend catch up to price).
More consolidation and more fuel for the next leg higher.
That is the cycle. This is how it usually plays out.
And any correction that would come would serve to just be another digestion or a correction in time and price (letting time/the trend catch up to price).
More consolidation and more fuel for the next leg higher.
That is the cycle. This is how it usually plays out.
18/
For those that don't agree, I mean...
just watch this interview again. I've had to relisten like 10 times while driving to work.
From 8:08 - 9:27.
🥐thesis seems to have changed from a few months ago. The catalyst for the MOAC (Mother of all crashes)
For those that don't agree, I mean...
just watch this interview again. I've had to relisten like 10 times while driving to work.
From 8:08 - 9:27.
🥐thesis seems to have changed from a few months ago. The catalyst for the MOAC (Mother of all crashes)
19/
USED to be for the FED pause as a "sell the news" event.
Now, it's more so the return or the re-emerging of inflation. So CPI is the 🔑!
And this is where the whole #bigflip coincides with the 🥐thesis!
Ppl that are vastly smarter than us are calling for structural inflation.
USED to be for the FED pause as a "sell the news" event.
Now, it's more so the return or the re-emerging of inflation. So CPI is the 🔑!
And this is where the whole #bigflip coincides with the 🥐thesis!
Ppl that are vastly smarter than us are calling for structural inflation.
20/
🥐: "We believe that inflation will put an end to this rally. It's just a matter of when and how."
From kitty (INArteCarloDoss) and shrub (agnostoxxx) -
they are the proponents of #bigflip and #gothilocks :
It's coming folks. Just a matter of when!
🥐: "We believe that inflation will put an end to this rally. It's just a matter of when and how."
From kitty (INArteCarloDoss) and shrub (agnostoxxx) -
they are the proponents of #bigflip and #gothilocks :
https://twitter.com/agnostoxxx/status/1624051379353296903?s=20&t=8Uhgk0wyRKMchl-SKRoV6Q
It's coming folks. Just a matter of when!
21/
So we have to wait for the next piece of data. Rinse and repeat for next month's NFP, CPI, FOMC.
Once that definitive sign of 🔥 inflation remaining sticky/structural/secular shows up in CPI, then markets will react appropriately~
For this week, we shall see...
So we have to wait for the next piece of data. Rinse and repeat for next month's NFP, CPI, FOMC.
Once that definitive sign of 🔥 inflation remaining sticky/structural/secular shows up in CPI, then markets will react appropriately~
For this week, we shall see...
22/
The safest thing to do is sit out of course.
But if you want to take directional bet, here is a chance to make (or lose) a lot of money.
People don't like to play events, but this is where the money is made folks!
Trading into and out of them!
The safest thing to do is sit out of course.
But if you want to take directional bet, here is a chance to make (or lose) a lot of money.
People don't like to play events, but this is where the money is made folks!
Trading into and out of them!
23/
But you have to 👀the data.
And see how markets REACT in light of such data.
Some are saying we can gap up on a cold CPI and then just sell off vol event starting Wed/Thurs b/c of the VIXPIRY and ICAHN trade. It's NOT that simple.
Price is truth.
Don't fight Mr. Market.
But you have to 👀the data.
And see how markets REACT in light of such data.
Some are saying we can gap up on a cold CPI and then just sell off vol event starting Wed/Thurs b/c of the VIXPIRY and ICAHN trade. It's NOT that simple.
Price is truth.
Don't fight Mr. Market.
24/
Take an opportunistic shot at the downside come 02/15/23, Wednesday... sure.
But to load the boat? I wouldn't count on it unless we get the data we're looking for AND a good liquidation past that 4050 strike (which ironically is near the JPM collar call strike too).
Take an opportunistic shot at the downside come 02/15/23, Wednesday... sure.
But to load the boat? I wouldn't count on it unless we get the data we're looking for AND a good liquidation past that 4050 strike (which ironically is near the JPM collar call strike too).
25/
I will not load Zee Puts until those conditions are met.
Those that are in Zee Puts from the beginning, you're underwater (depending on what strike and date you purchased). Those that loaded from 4200 when VIX was 17, great job...you’re up huge. But be nimble as well.
I will not load Zee Puts until those conditions are met.
Those that are in Zee Puts from the beginning, you're underwater (depending on what strike and date you purchased). Those that loaded from 4200 when VIX was 17, great job...you’re up huge. But be nimble as well.
26/
This is something I've been thinking about more and more recently as Lord Fed posted that it was the institutions that were short covering that led this rally.
Well, if they do begin to load and chase, market has MORE to go and I’ll be joining along.
https://twitter.com/SenesLULZ/status/1622496409147834368?s=20&t=DRGTxCSM81oOmMTbvCiLFg
This is something I've been thinking about more and more recently as Lord Fed posted that it was the institutions that were short covering that led this rally.
Well, if they do begin to load and chase, market has MORE to go and I’ll be joining along.
27/
For the trolls like this one pictured: your argument is as idiotic as I've seen.
You realize the same thing can be said for the bear case right?
Literally, the ONLY HOPE for bears next week is hot CPI print... lmao. Friendly banter :)
Anyhow...
For the trolls like this one pictured: your argument is as idiotic as I've seen.
You realize the same thing can be said for the bear case right?
Literally, the ONLY HOPE for bears next week is hot CPI print... lmao. Friendly banter :)
Anyhow...
28/
As always, be water.
Be ready to flip from 🐂/🐻 and vice versa at a moment's notice.
EYE THE DATA!
I have a feeling that a lot of people are going to be caught off-guard.
Ask away if sth unclear. Won't respond to troll comments.
Best of luck.
Love y'all!
As always, be water.
Be ready to flip from 🐂/🐻 and vice versa at a moment's notice.
EYE THE DATA!
I have a feeling that a lot of people are going to be caught off-guard.
Ask away if sth unclear. Won't respond to troll comments.
Best of luck.
Love y'all!
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