This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
Otherwise, enjoy the column!
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MAY 29, 2020
STOCKS – NONE
MACRO – SPY,
MIKE’S READING THE MARKET PREMIUM CONTENT $35/MONTH OR $300/YR–
- Dealers Still Supporting The Market
- A Busy Next Week Starts Today
- Thinking About Where Stocks Go Next
- Nearing A Major Turning Point -Midday
- Options Bet Indicate Apple May Drop Soon
It has become rather clear to me this week, that the large volatility swings we have witnessed are merely driven by broker-dealers hedging their books against their open options positions. It obvious, they need to get long futures around the 3,000 level in the S&P 500 and short futures around the 3,050 level. It is that easy. This is a topic that we have discussed every day in my subscription area for weeks now, and it was much more apparent this week than in weeks past, which is why I’m bringing it up here. All one needs to do is look at the open interest levels in the S&P 500 to see. Premium content – Dealers Still Supporting The Market
It is not a coincidence that all week the S&P 500 could not close above 3,050, despite several late-day attempts, and came roaring back when the SPX got to or below 3,000. It is just that simple; there is nothing more too.
Again, if you are wondering why I have never discussed this before, well, because it is a difficult topic to grasp, and it is more complex then the way it is described above. Many of the members took a few weeks to get caught up to speed, but for the most part, they all get it now.
For now, this all continues to be just a part of the large broader momentum trade that has been taking place in the markets.
That is all for a Friday.
-Mike
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.