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#Macro – $SPX, $NDX, $USDCAD
- Spreads Have Collapsed
- RTM Unusual Options Activity: Traders Bet On A Sharp SPY ETF Decline
- RTM: Beyond Stretched
- RTM Unusual Options Activity: The TLT May Be Due To Pullback
- RTM: Damage Control
- Stocks Vs. OPEX
- RTM: Post FOMC Observation
Stocks finished the day lower, which hasn’t happened much recently, in a sudden turn mid-day. There was no good explanation for the sudden turn, but I think if you have been reading me for any length of time, then you know that today was Vix options expiration, and there were a very large amount of negative flows suppressing the VIX the past few days/weeks, and now those are gone.
With flows of December opex and now Vixperation behind, options flows that have supported the market are officially gone. I have little doubt in mind that these flows have driven this final leg of the market higher since the Fed meeting last week. The rest of the already-known move was based on a negative gamma positioning built in October and was violently unwound, which then kicked off systematic flows.
The entire rally has been built with a pile of very loose sand, and again, it wouldn’t surprise me to see us go right back to where we start over the next several weeks at 4,100. The index today peaked at 100% of wave 3, and yes, you can count the rally as a 5-wave structure up, and it is likely completely.
I don’t want to get too far out in front because we have seen these big intraday reversals a few times during this rally, and they haven’t worked out in marking the top. At least this time, things seem to be in better alignment, given there is a count that works; the VIX is moving higher, and the S&P 500 can’t get more overbought than it has been the last couple of days. So again, if this is some top, it would make sense.
What is interesting, I thought today, was that the NASDAQ 100 got above the November 2021 intraday high and closing high, as well as yesterday’s highs, and then closed below all three levels. What does it mean? It could mean a few things or could mean nothing. I won’t speculate today, but I will wait and see how it develops. On the surface, it seems like a rejection of the recent highs.
Meanwhile, we also saw the USDCAD break out today and push higher out of a falling wedge. Perhaps the decline in the USDCAD is finally over, and there appear to have been five waves lower since peaking on November 1.
Anyway, that’s all. There will be more tomorrow.
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