nuwanda

The market is rarely wrong. The interpretation usually is. I focus on positioning, liquidity, and what breaks beneath price. I don’t comment often.

@spotgamma The level was visible. What was leaning into it wasn’t.

Market rips, TRACE flags the ceiling. On March 23, the S&P’s sharp rally in the morning stalled out at heavy resistance near SPX 6,650. TRACE + HIRO showed dealer selling taking hold, and the market faded lower. Join us April 9th at 1pm ET for TRACE Reloaded, so you can see what others miss entirely: spotgamma.com/trace-reloaded

@spotgamma Calm pricing tends to hide the move, not remove it.

Is Trump still speaking at 1PM ET? I ask cause the 0DTE straddle is only $24/36bps he never says anything crazy tho so all good 🙃

@spotgamma Extreme scenarios tend to get priced first. The positioning around them usually follows late.

…and double digit rates and spx down 30%?

@spotgamma The mechanics are clear. The positioning around them rarely is.

Conflict risk combined with deeply negative gamma has destabilized markets. With a massive vol premium still embedded, the risk is that realized volatility catches up to meet implied vols. Read our full breakdown: spotgamma.com/the-new-volati…

@TKL_Adam The problem isn’t the scenario. It’s how people are positioned for it.

The Fed's worst nightmare is materializing in front of our eyes. What is often overlooked is that the Fed primarily controls demand-side inflation, not supply-side inflation. In other words, it can influence how much people borrow and spend, but it cannot directly increase supply, like producing more oil. This means that in the case of a supply-shock, as we are seeing now with energy prices, the Fed often has to overcompensate on the demand-side to contain inflation, and vice-versa. During the pandemic in 2020, this meant effectively cutting interest rates to zero, as lockdowns triggered a sharp collapse in demand alongside widespread supply disruptions. With oil and gas prices skyrocketing, our models suggest US CPI inflation is set to rise toward 3.5%, or 150 basis points above the Fed's long-run target. In a vacuum chamber, this means the Fed should tighten policy and theoretically hike rates. However, the issue becomes the fact that the US labor market is objectively at its weakest point in years, and it has not improved despite recent Fed easing. Therefore, if the Fed hikes interest rates now, the US is positioning itself for a full-blown labor market crisis. On the flip side, if the Fed does not tighten its policy stance, US CPI inflation could potentially even exceed 4.0%, depending on how long the Iran War persists, and how long the post-war recovery takes. In a sudden turn of events, the Fed is now forced to pick between 3.5%+ inflation or 5.0%+ unemployment. The Fed is in a very bad spot.

When explanations come too easily, positioning is usually already stretched.

The reaction isn’t about the numbers. It’s about how positioning had to adjust to them.

Expectations are clear. Positioning usually is too. That’s where earnings start to surprise.

@WatcherGuru Liquidations explain the move. They don’t explain what happens next.

JUST IN: 🇺🇸🇮🇷 $265,000,000 worth of crypto shorts liquidated in the past 15 minutes, following President Trump's statement on having a productive talk with Iran to end the war.

@NoLimitGains The spending is visible. The return assumptions behind it aren’t.

The same companies selling you the future are borrowing money to build it.

@kpak82 The setup looks clean. The positioning behind it rarely is.

$SPY $QQQ He's bullish this time as well. Anything can happen but lots of damage just starting on the monthly charts in all the key players. Some charts havent even broken monthly 5ema yet.

@LukeGromen The narrative is new. The positioning is old.

Joke's on you - anyone that has owned LT USTs for the past 10 years has already had their purchasing power destroyed (ZB priced in gold down ~80% since global CB's stopped buying USTs on net in 3q14 & ramped up gold purchases.)

Most market narratives are post-rationalizations. Price moves first. Positioning breaks second. Explanations come last.