Between META pulling markets down first, and now GDP coming in weaker than expected, what is noted above no longer applies. 
The expectation from last week played out well. As noted then, things change now.
One glove come off tomorrow, with PPI, and the next one with CPI on Wed. Note that Fri is opex, so the positive flows that kept us up last week and into today will be gone. I have no idea what Wed to Fri will do, and we could see some amount of volatility.
VIX seems to be pricing in a nothing-burger, so as long as CPI is not super hot and yields do not spike, we should have a supportive situation into next week, and this might be the start of another bull run. However… VIX is not particularly high, and put wall is at 5000, so there’s some room to fall before hedges find support. As usual, worth keeping an eye on vol trigger of 5195 - we dip below it, and that’s bad news.
1 Like
It’s that time of the month. Opex is tomorrow. We’re pretty much at ATHs, somewhat overstretched, and opex mechanics would suggest that dehedging flows should give us 1-3 red days in middle of next week, at most.
Probably a buying opportunity for the near future though, as everything seems to conducive to higher markets - low VIX, low DXY, low 10Y yields. And now that CPI came cooler, Fed might even cut.
Will change this view if we close below the vol trigger, into negative gamma territory, in the next few days. But again, feels like that is unlikely.
1 Like