Hey guys
Big day tomorrow , the us job data are coming and the market is getting ready to digest the news so volatility is imminent.
lets see what happened
Activity yesterday was interesting with a $31,000,000 options trade that caused the market to rally from my initial SPX support – Lifting all risk on assets as traders followed the move. https://www.bloomberg.com/news/articles/2022-10-05/wells-fargo-says-one-big-option-trade-fueled-s-p-500-midday-jump?sref=lxtOpopM
This was a huge call position, looking for SPX to be around 4500 by the end of October expiry… big balls bet.
Just from a mechanics perspective we could still see some further upside as shorts are liquidated in legacy and that kinda continued along with this rogue options trade. VIX (Vol) was sold down and we did see some call activity so overall it was a bullish day. More bullish than previous days for this rally.
However the call walls didn’t materially shift higher so although the day was overall bullish there’s still work to do to convince me of any sustainable rally.
My base case remains this can’t continue for a sustained period of time and we likely fall…
Due to the action though I remain open to SPX 3950’s for max pain for bears and to rope in further longs before a further drop. I’ll play this potential move with low risk, tight plays in crypto / risk
asset
Many will be looking for a rise in unemployment to feed the ‘’powell will pivot’’ narrative. Today we’ve just had the little sweetener from the Initial jobless claims that came in above expectations so this benefits the bulls and build the case for more upside.
