Market Review for December 2nd, 2020
It looked like the Russell 2000 was just about to roll at the open this AM…and then the gamma crew call buyer effect took hold and the buy programs kicked in. Here was a live shot of bulls walking away from the crime scene on the Russell as they took it 2.5% up off the LOD (bears are the ones exploding):
Have to wait for another day (or several) it seems…
Single stock call buying was day number 12 in a row with a sub 0.60 reading…moarrrr callllllssss….
The beatings will continue until call buying in single stocks concludes. Volatility was mixed bag with the VIX green today. Overall volatility is basing here as indexes distribute is the playbook so far this week:
- $VIX closed up +1.93%
- $VVIX closed down -0.84%
- $VXX closed down -0.52%
- $UVXY closed down -0.89%
- $SVXY closed up +0.41%
Jumping right into the big 3 macro economic drivers:
- COVID19 – Huge jump in hospitalizations today…this is in line with the projections as case counts continue to elevate this is a trailing stat. What is sick/heartbreaking/disgusting is the last stat that will set records soon = deaths.
- CHINA – Announced the huge partnership with the EU. This whole situation is not going away…we are falling behind.
- US Fiscal & Monetary Stimulus – Biden for the win after hours tonight…its going to be just shy of $1bil fiscal (for starters)
Mentioned yesterday on the webcast and on the earlier posts this week that indexes would either blow off here or distribute. Both come with their own mixed bag of effects. Distribution is what it seems to be unless we see a break up and out by the end of the week. Indexes are rejecting new highs (they are happening but are being sold thus far) and volatility is basing. The Russell is the weakest link so far as expected. Internals are still positive though, so no signs of internal capitulation there, so caution of upside extension in the indexes still remains. And then…there is…the
Still just getting torched…BUT remember…we still are just hunting the VPOC level on the weekly chart for the $USD (about 0.50%-1% lower from here which also coincides directly with the Euro strength and corresponding upside target levels) which will be interesting to see what happens there. I suspect a reaction that may last a while because when the $USD is in demand and everything is getting thrown out…it kinda looks like this:
For the rest of the week, watch for:
- Volatility – going to start rising with equities (or even in front of equities)?
- Indexes going to actually break out or are internals going to start rolling? One has to give here
- Russell 2000 – will it or won’t it? No new highs or minor new highs don’t help this…has to extend higher now
- $USD – 0.50% to 1.0% lower and we will see what time it is and which toilet paper it is…the toilet kind or the COVID kind…
Under The Hood
$SVXY – Short VOL Futures
FLOWs are starting to level out and look like they could start turning over. Momentum has been embedded for a while. No movement at the moment though.
$VXX – Long VOL Futures
FLOWs are flattening out. Nothing turning up yet. This is in no man’s land at the moment but seems to be settling. This level is a level of accumulation (could be potentially) so interesting to see how this shakes out the next two weeks with year end.
$SLV – SILVER ETF
FLOWs did not confirm…VPOC is holding. Chaser block bars (that is what I call them when FLOWs don’t confirm) showing up. So this has two choices – up and over or die. I never bet against the FLOWs…
$GLD – GOLD ETF
FLOWs are negative. Price has bounced. I don’t care. GEX structure is still wayyy to close to a flip point near the current price. VWAP is sitting on top of price. This is bearish structure (which is CRAZY considering the $USD drubbing)…so odds favor this is heading lower to $162 and even $140 unless is clears $183.
$GDX – GOLD MINING ETF
FLOWs failed at the zero line. If they turn down watch out below.
$GDXJ – GOLD MINING ETF
Ditto GDX. I don’t care if price tage $54.20…FLOWS have to turn up or its a fade.
$GBTC – BITCOIN ETF
Caveat Emptor. One door…crowded theatre. $13 handle on this would be OH SO PAINFUL and still SO BULLISH.
$TLT – 20 YR TREASURY ETF
FLOWs are negative. GEX is negative…selling into weakness…this is IBT (in big trouble)…not to be confused with irritable bowels…or maybe to be confused with irritable bowels? FED def has some looking at this chart…
$UUP – US Dollar Bullish Fund ETF
Cheap knock off brand. Single ply…you know the 7 grit sandpaper stuff that chafes for a few days…
$FXE – Eurodollar
FLOWs are positive on daily now and targets are overhead. I expect them to get tagged at this point b/c they are really close. Just know this…what this means is that this is a major move that is finishing. The fact that this HAS EXTENDED to these upside targets makes me more bearish of this into 2021 and MORE $USD bullish. If this tags these levels upside and terminates…buy all the 7-grit sandpaper you can get your hands on…you will need it in 2021.
$CYB – Chinese Yuan ETF
FLOWS down. VPOC moved up closer to price…plates are shifting on the earth’s crust…pay attention.
$EEM – Emerging Markets Index
This I expect to front run the $USD turn…meaning it should start to weaken ahead of the final $USD puke. So far so good. FLOWs seem to be topping out…can’t imagine why. Oh…and a little birdie told me this is being pushed to retail clients for 2021 as a potential outperformer right now. You know what that means…muppet time??!
$EWZ – BRAZIL ETF
Direct inverse to $USD. Ride it until the $USD turns and a perfect example of how GEX runs everything around me…”buy into strength”…and FWIW this is a member of the 100 most traded options symbols btw…for those questioning my statement.
$XLF – FINANCIALS & BANKS ETF
Banks just riding the GEX wave…can they tag the red FVG from March? Come on guys…you can do it! Blocks have had enough and are sell side, FLOWs are declining, but gamma is gamma at the moment…ride it until the wheels fall off.
$BKLN – SR LOANS (JUNK OF THE JUNK)
J-Rome is sleeping fine tonight. The pink VPOC of death (and this is the chart of death for 11,000,000,000,000 reasons btw)…is far below.
$HYG – High Yield Grade Junk Bonds
Ditto $BKLN as boomer 60/40 MPT is ok for another night…
$AXP – AMERICAN EXPRESS (BIZ CREDIT)
Why not tag the upside $132 level for a clean 65-70% move in 2 months? Totally normal markets…behaving and functioning completely normally…
$SPY – S&P 500 Index ETF
FLOWs can’t keep the uptrend alive. GEX flip creeping up higher to uncomfortable levels. BUT nothing rolling over yet. VIX has a ways to go to be dangerous and all the options positioning isn’t supportive of this rolling yet (gamma call buying etc.) Just know though, the further this goes the more likely this puts the bulls to the ‘depends’ test at $330…not the it depends but the sh%t your pants ones…
$QQQ – Technology Large Cap Index ETF
$IWM – Russell 200 Small Cap Index ETF
FLOWs are turning down…but not a sharp move. This means that price can linger for a while if there is no catalyst as every intraday dip is spike bought and further sold into. This is the hallmarks of distribution. If this breaks up and out – no prob. If it doesn’t, and this distribution persists, the short here will be epic.
$DIA – Dow Jones Industrials Index ETF
Ditto $IWM except even better because its thinner and more susceptible to the doom loop cycle.
Bring your market and option flow questions Tuesday’s when Samantha interviews Jonathan Gibbons of Vigtec.io in her Guest Captain Interview Series.