Imagine you are a large fund manager with trillions of dollars.
The market is boring and mostly sideways, so you donโt have any opportunity.
Suddenly, you hear that Country A is planning to attack Country B.
You start shorting the entire market with billions of dollars.
Then you realize that in future while booking profits, youโll need liquidity.
You ask Country A to hold the attack for two more days and carry it out on Saturday.
Country A says why should we listen to you?
You promise to give the supreme leader $2 Billion in black.
Country A agrees.
You take even more short positions on Friday.
Country A attacks Country B on Saturday, and panic is through the roof.
Itโs the weekend, so the stock market is closed; hence, retailers are not shorting.
The market opens on Monday, and retailers rush to short sell.
You start squaring off and booking profits while retailers provide liquidity.
You end up making billions of dollars in profit over the weekend, doing nothing.
After two weeks, both Countries A and B halt the war due to unknown reasons
Now you wait for three more months and then ask countries A & & B to repeat the same process for endless profits.
I request you to connect the dots with the IranโIsrael war that has been going on for the last two years.
When the selling pressure finally comes, it will be insane
The microstructure of the market won't be able to handle it
Not there yet tho
The storm is on the horizon tho
Breakdown of the Black Friday data tells us:
-Consumer is weakening.
-95% of sales volume was financed.
-67% of that intends not to pay off within 30 days.
-Roughly $1B was spent using BNPL models which are the worst debt.
This points to a *really* unhealthy economy.
$SPY What You Really Did Not See Today?
Something you do not see often happened today. A JPM Collar Tweak Mid-Quarter. Details below.
1. The SPY opened higher, crushing VIX overnight and into the 10AM EST hour,
2. While this was happening, the $JPM desk was taking advantage of lower VOL and spent "hundreds of millions" on adjusting their hedge fund collar for Q4: they made it more "Bearish-biased" than when they created it end of September. They tried to avoid slippage (price drop from millions in puts) by buying a few millions in short-dated 11/21 and 11/28 calls, but that did not work, you saw how the price tanked from $667 to $661 in no time (!!)
3. My read of the new numbers shown in the table below, courtesy of @CheddarFlow as data source, is that now they go from 5-7% downside cushion, previously to $6330 SPX, now to 4-12% cushion to $6000 SPX
4. The $140+ Millions put purchase on $SPXW at $6900 OTM is interesting, and builds a gamma wall there for dealers to start hedging this new level. This can cap end of the Q4 max price to be just above this number at the $6950 level. If you are thinking $7500 by year end like Tom Lee, now forget about it!
To summarize, JPM readjustd to factor in a larger pullback risk. This move suggests more resistance at $6800, no more easy going through this level, see the table. This means more sideways, more volatility, and when and if $6900 is reached again, there will be a big fight there.
For tomorrow, green bias new moon, pullback risk AM with the Sept job report, then opex Friday, maybe pin the price at a much higher level than the $6600 put wall to expire a lot of puts worthless, we will see a wedge on Friday, most likely, that will also kill 0DTE premia. Bears will be aware post NVDA and are already providing the overnight squeeze.
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Guys i'd like to thank @not_kler for suplying me with endless feet pics. His roster is truly amazing. If you are in a feet pic recession you should hit my boy up. ๐๐๐ฆถ๐ฆถ๐ฆถ๐ฆถ๐ฆถ๐ฆถ