Categories
Commentary

Daily Brief For May 13, 2021

Market Commentary

Index futures in price discovery.

  • Inflation contagion hits pocketbook.
  • Ahead: Claims, PPI, and earnings.
  • Index futures are lower but steady.

What Happened: U.S. stock index futures continued their sell-off, overnight, after a strong move lower, Wednesday.

Graphic updated 7:00 AM EST.

What To Expect: Thursday’s regular session (9:30 AM – 4:00 PM EST), in the S&P 500, will likely open just outside of prior -range and -value, suggesting the potential for immediate directional opportunity.

Adding, during the prior day’s regular trade, the worst-case outcome occurred, evidenced by initiative trade below Tuesday’s excess low. This is significant because that reference marked the start of a prior intermediate-term bounce.

Excess: A proper end to price discovery; the market travels too far while advertising prices. Responsive, other-timeframe (OTF) participants aggressively enter the market, leaving tails or gaps which denote unfair prices.

This downside price discovery comes alongside the release of poor employment and payroll data. 

Price Discovery (One-Timeframe Or Trend): Elongation and range expansion denotes a market seeking new prices to establish value, or acceptance (i.e., more than 30-minutes of trade at a particular price level). 

“‘Markets have lost a little bit of confidence that the Fed has control of inflation’ and the concern was that the central bank might wait too long to address the rise,” Victoria Fernandez, Crossmark Global Investments chief market strategist, said. “I am not sure the market is extremely comfortable with that at this point.”

However, that said, stock indexes may be positioned for a vicious rebound as near-term downside discovery may have reached a limit, based on market liquidity metrics and the inventory positioning of participants. According to SqueezeMetrics, the steepness of the GammaVol (GXV) curve suggests that there’s more risk to the upside than the downside, at the S&P 500’s present juncture.

More On Gamma: In the simplest way, gamma is the sensitivity of an option to changes in underlying price. Dealers that take the other side of option trades hedge their exposure to risk by buying and selling the underlying. When dealers are short-gamma, they hedge by buying into strength and selling into weakness. When dealers are long-gamma, they hedge by selling into strength and buying into weakness. The former exacerbates volatility. The latter calms volatility.

Knowing the above, for today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,051.00 regular trade low targets the $4,069.25 high volume area (HVNode). Initiative trade beyond the HVNode could reach as high as $4,082.75 HVNode, $4,105.75 low volume area (LVNode), and then the $4,117.00 POC. 

Volume Areas: A structurally sound market will build on past areas of high volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area which denotes directional conviction and ought to offer support on any test). 

If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

POCs: POCs (like HVNodes described above) are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.

In the worst case, the S&P 500 trades lower; activity below $4,051.00 puts the index within a composite low-volume zone, a situation in which follow-through, to the next high-volume area, is likely. Further, participants, in such a case, should look for responses at the $4,015.00 and $4,001.00 POCs, the $3,980.00 50% Fibonacci retracement, the $3,943.00 HVNode, and lastly, the $3,918.25-$3,908.00 Fibonacci and volume area confluence zone.

Graphic: 4-hour profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Daily candlestick charts of the S&P 500 (top left), Nasdaq 100 (top right), Russell 2000 (bottom left), and Dow Jones Industrial Average (bottom right).
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for May 12. Activity in the options market was primarily concentrated in short-dated tenors, in put strikes as low as $389.00, which corresponds with ~$4,000.00 in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: SHIFT search suggests participants were most interested in short-dated put strikes at and below current prices in the cash-settled S&P 500 Index (INDEX: SPX), Wednesday. 
Graphic: SHIFT search suggests participants were most interested in long-dated call strikes at and above current prices in the cash-settled Nasdaq 100 Index (INDEX: NDX), Wednesday.

News And Analysis

Crypto | Musk splits from Cathie Wood’s Ark on Bitcoin’s environment cost. (BBG)

Economy | Travel bookings are surging as vaccines unleash pent-up demand. (Axios)

Markets | The SPAC King doing just fine even as the bubble starts to burst. (BBG)

Energy | Top U.S. pipeline recovering from a devastating ransomware attack. (REU)

Markets | Hedging gets frantic as puts soar amid stock market hammering. (BBG)

Economy | April’s inflation surge wasn’t as drastic as it looked. Real test ahead. (CNBC)

What People Are Saying

Innovation And Emerging Trends

MedTech | Unpacking how mRNA molecule became a vaccine game-changer. (FT)

Energy | Nuclear reactions are increasing in an inaccessible Chernobyl chamber. (CNET)

Climate | The Fed privately presses big banks on risks from climate change. (REU)

Economy | China bets on productivity, over population, to drive its economy. (BBG)

Crypto | Fintech giant Ant Group’s MYbank joins China’s digital yuan platform. (SCMP)

About

Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.

Disclaimer

At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

Categories
Commentary

Daily Brief For April 21, 2021

Market Commentary

Index futures auction within prior range, position for directional resolve.

  • Virus surges, earnings accelerate.
  • Calendar light. ECB rate decision.
  • Buyers responded to lower prices.

What Happened: U.S. stock index futures auctioned sideways, overnight, after strong downside discovery the day prior.

ING Group Strategists“Markets remain very much caught between the rock of improving macroeconomic conditions and the treacherous waters of geopolitical risks and alarming Covid-19 case growth in some corners of the world.”

What To Expect: Wednesday’s regular session (9:30 AM – 4:00 PM EST) will likely open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity. 

Adding, during the prior day’s regular trade, the worst-case outcome occurred, evidenced by initiative trade beyond the $4,142.00 regular trade low, down to the $4,122.75 HVNode, which is significant because denotes an area of prior two-sided trade.

Volume Areas: A structurally sound market will build on past areas of high volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area which denotes directional conviction and ought to offer support on any test).

If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

Further, in a nutshell, the market explored higher prices and is now probing into pockets of old value to drum up increased participation. The market is doing what it is supposed to — move to the area where participants want to do business. Given the remaining price targets at $4,200.00 and minimal excess (i.e., flat high) left behind last Friday’s price discovery, odds are participants lacked conviction and the market was unable to advertise higher prices.

Excess: A proper end to price discovery; the market travels too far while advertising prices. Responsive, other-timeframe (OTF) participants aggressively enter the market, leaving tails or gaps which denote unfair prices.

Price Discovery (One-Timeframe Or Trend): Elongation and range expansion denotes a market seeking new prices to establish value, or acceptance (i.e., more than 30-minutes of trade at a particular price level). 

This is generally a bullish dynamic. Why? Think of there being unfinished business at the all-time high. As stated earlier, a market moves to where there is business to be conducted.

Moving on, the two-day liquidation has pushed the S&P 500 down into short-gamma territory. This is not good. Why? Short-gamma is opposite to the forces that crush volatility and promote lengthy bursts of momentum.

Liquidation Breaks: The profile shape suggests participants were “too” long and had poor location.

Gamma: Gamma is the sensitivity of an option to changes in the underlying price. Dealers that take the other side of options trades hedge their exposure to risk by buying and selling the underlying. When dealers are short-gamma, they hedge by buying into strength and selling into weakness. When dealers are long-gamma, they hedge by selling into strength and buying into weakness. The former exacerbates volatility. The latter calms volatility.
Graphic: SPDR S&P 500 ETF Trust (NYSE: SPY) in short-gamma territory, via SpotGamma.

Due to occurrences discussed in the weekend commentary, such as increased put selling during market strength, volatility expansion and a rise in delta (i.e., exposure to the underlying asset) will force put-side option sellers to sell into weakness, to hedge off their risk, thereby exacerbating volatility.

Graphic: SqueezeMetrics highlights implications of volatility, direction, and moneyness.

In the event that some exogenous event (e.g., COVID-19 resurgence, tax-hike) was to surface, odds favor increased volatility and potential for downside.

Moreover, for today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades higher; activity higher than the $4,142.00 regular trade low targets the $4,155 high volume area (HVNode). Initiative trade beyond the HVNode could reach as high as the $4,171 VPOC. In the worst case, the S&P 500 trades lower; activity below $4,122.75 targets the $4,104.00 low volume area (LVNode). Initiative trade beyond that figure puts in play the $4,082.75 and $4,069.25 HVNodes.

POCs: POCs (like HVNodes described above) are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.
Graphic: 65-minute profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for April 20. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as low as $381, which corresponds with $3,810 in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: SHIFT search suggests participants lack directional conviction in the SPDR S&P 500 ETF Trust (NYSE: SPY).

News And Analysis

Science | Man-made lakes in U.S. West and Mexico to shrink to historical lows. (AP)

Markets | Mortgage rates come down as the bond market regains strength. (MND)

Markets | Federal Reserve will limit any overshoot of inflation target, Powell says. (REU)

Travel | Washington says travel warnings will cover 80% of the world’s nations. (BBG)

Policy | On the verge of a realignment of politics, economic policy, and living. (Ritholtz)

Markets | MIAX expanding futures division with new hires from Cboe and Citi. (TT)

Markets | U.K. scaps MiFID II requirements in ambitious capital markets reform. (TT)

Economy | While lumber prices are soaring, actual logs remain very dirt cheap. (BBG)

What People Are Saying

Innovation And Emerging Trends

Innovation | Lessons from Jeff Bezos’ annual letters to Amazon shareholders. (CB)

Markets | How Robinhood made trading easy and maybe even too hard to resist. (BBG)

Space | International crew, recycled capsule: SpaceX is preparing to launch. (AMN)

Venture | A look at Stripe, the most highly valued venture-backed private company. (CN)

FinTech | Fintech IPOs: Four foundational keys to success, preparing for IPO. (FM)

FinTech | U.K. creates a new fintech sandbox for distributed ledger technology. (S&P

FinTech | Venture capital interest in Latin America swells as fintech takes flight. (PB)

FinTech | Insurtech startups are leveraging rapid growth to raise big money. (TC)

FinTech | China’s central bank plans to build out a fintech cloud infrastructure. (SCMP)

 About

Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, Canadian businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.

 Disclaimer

At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

Categories
Commentary

Daily Brief For April 20, 2021

Market Commentary

Index futures auction lower, attempt to validate higher prices.

  • Investors weigh earnings, taxes.
  • Light calendar, earnings pick up.
  • Indices correct in time and price.

What Happened: U.S. stock index futures auctioned lower overnight as investors weighed the risks of exposure given the potential for surprise earnings results and a recent spike in virus cases, among other factors. 

What To Expect: Tuesday’s regular session (9:30 AM – 4:00 PM EST) in the S&P 500 will likely open outside of prior-range and -value, suggesting a higher-than-normal potential for directional opportunity. 

During the prior day’s regular trade, the worst-case outcome occurred, evidenced by trade below the $4,171.00 VPOC, which is significant because it marks an area where participants found it most valuable to conduct business during a prior session. Thereafter, overnight, participants discovered lower prices and solicited responsive buying at the $4,137.00 high-volume area (HVNode).

Volume Areas: A structurally sound market will build on past areas of high volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area which denotes directional conviction and ought to offer support on any test).

If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

This price action is occurring on the heels of an outstanding rally, fueled by vaccine rollouts, supportive central banks, and improved consumer finances. In a statement, JPMorgan Chase & Co (NYSE: JPM) expressed its optimism on a sustained equity market boom. 

“We would not be cutting stocks exposure on a 6-9 months horizon, and continue to see any dips as buying opportunities,” JPMorgan analysts said. “We would not expect to see a more sustained pullback before Q4.”

Further, as stated in prior commentaries, equity markets are positioned bullish, but there exists an increased potential to correct in time and price. Should there be a drastic turn and spike in volatility, participants must be ready to accept the possibility of a violent liquidation, given poor structure left behind prior price discovery and increased put selling, among other factors

Price Discovery (One-Timeframe Or Trend): Elongation and range expansion denotes a market seeking new prices to establish value, or acceptance (i.e., more than 30-minutes of trade at a particular price level).

For today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,142.00 regular trade low (RTH Low) targets the $4,155.00 HVNode. Initiative trade beyond the HVNode could reach as high as $4,167.50 overnight high (ONH).

In the worst case, the S&P 500 trades lower; activity below $4,142.00 targets the $4,122.75 HVNode. Thereafter, if lower, participants can look for a repair of the poor structure sitting at the $4,113.00 low. Trading below $4,104.00 suggests a test as low as the $4,069.25 HVNode is likely.

Graphic: 65-minute profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for April 19, 2021. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as low as $403, which corresponds with $4,030 in the cash-settled S&P 500 Index (INDEX: SPX).

News And Analysis

Economy | Equity markets haven’t priced in Biden’s corporate tax hikes, yet. (BBG)

Recovery | More than half of U.S. adults vaccinated. Why are cases rising? (AB)

Trade | Why the chip shortage is so hard to overcome despite recent efforts. (WSJ)

Economy | Fannie Mae seeing a brighter outlook for housing and economy. (MND)

Economy | Fearing foreclosure crisis, watchdog cracks down on servicers. (REU)

Politics | Xi is challenging U.S. global leadership, warns against decoupling. (BBG)

Markets | Dogecoin’s surge was fueled by retail and institutional participants. (TB)

Markets | Credit Suisse halts trader’s fund on risk concerns, post-Archegos. (BBG)

Markets | China’s yuan is overvalued, and that could stoke global inflation. (BBG)

Markets | Stock shorts collapsed as no hedge fund wants head ripped off. (BBG)

What People Are Saying

Innovation And Emerging Trends

Markets | Large hidden bond market problem poses a whole new set of risks. (BBG)

FinTech | Here is how the big brokerage firms are breaking into bitcoin trading. (TB)

FinTech | Intercontinental Exchange-owned Bakkt targeting innovation, NFTs. (BZ)

Markets | The OCC has announced a reduction of its clearing fee to two cents. (TM)

Venture | Where the startup world sees money in the $2.3T infrastructure plan. (CN)

 About

Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, Canadian businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.

 Disclaimer

At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

Categories
Commentary

Daily Brief For April 19, 2021

Market Commentary

Index futures are attempting to balance and validate higher prices.

  • Global pandemic recovery uneven. 
  • Investors await corporate earnings.
  • Indices to correct in time and price.

What Happened: U.S. stock index futures balanced ahead of a fresh round of corporate earnings.

What To Expect: Monday’s regular session (9:30 AM – 4:00 PM EST) will likely open inside of prior-range and -value, suggesting a limited potential for directional opportunity. 

Adding, during the prior week, the best case outcome occurred, evidenced by initiative trade that established new all-time highs in the S&P 500, Nasdaq-100, and Dow Jones Industrial Average.

Coming into this week, though equity markets are positioned bullishly, there exists an increased potential to correct in time and price. Adding, should there be a turn and spike in volatility, participants must be ready to accept the possibility of a violent liquidation, given the poor structure left behind prior price discovery and increased put selling, among other factors highlighted in Sunday’s commentary.

Price Discovery (One-Timeframe Or Trend): Elongation and range expansion denotes a market seeking new prices to establish value, or acceptance (i.e., more than 30-minutes of trade at a particular price level). 

For today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above the $4,161.75 regular trade low targets the $4,171.00 VPOC. Initiative trade beyond the VPOC could reach as high as the $4,183.50 regular-trade high and the cluster of Fibonacci price extensions above $4,187.00. In the worst case, the S&P 500 trades lower; activity below $4,171.00 is likely to solicit responsive buying near the $4,157.00 high-volume area (HVNode). Thereafter, if lower, $4,137.00 and $4,123.00 are other valuable areas to do business. 

Volume Areas: A structurally sound market will build on past areas of high-volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area which denotes directional conviction and ought to offer support on any test). 

If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high-volume for favorable entry or exit.

POCs: POCs (like HVNodes described above) are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.

Responsive Buying: Buying in response to prices below area of recent price acceptance.
Graphic: 4-hour profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for the week ending April 16. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as low as $364, which corresponds with $3,640 in the cash-settled S&P 500 Index (INDEX: SPX).

News And Analysis

Markets | Crypto stock mania tested by sliding prices, bitcoin drop. (BBG)

Markets | China opens borders to billions of dollars of gold imports. (REU)

Markets | Key takeaways from Q1 results of the investment banks. (Moody’s)

Travel | Airlines can’t get the world flying despite a big U.S. boom. (BBG)

Trade | TSMC says trade tensions may disrupt chip equipment supply. (BBG)

What People Are Saying

Innovation And Emerging Trends

Startups | Tips for those that are joining a startup for the first time. (FRR)

Space | Why flying a four-pound helicopter on Mars is a big deal. (BBG)

FinTech | U.S. banks deploy AI to monitor customers and workers. (REU)

Spirits | Whisky world at war as tech allows for instant spirit aging. (FT)

Crypto | Bank of England, HM Treasury create a CBDC taskforce. (BoE)

Technology | Clubhouse closes round of funding, raising value. (REU)

 About

Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, Canadian businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.

 Disclaimer

At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

Categories
Commentary

Daily Brief For April 15, 2021

Market Commentary

Index futures attempting to initiate out of balance and explore higher prices.

  • Fed to taper before rate increase.
  • Watch claims and other releases.
  • The market rejected lower prices.

What Happened: U.S. stock index futures rose ahead of releases on key economic data and earnings reports.

What To Expect: Thursday’s regular session (9:30 AM – 4:00 PM EST) may open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity. 

Adding, during the prior day’s regular trade, the worst-case outcome occurred, evidenced by an intraday liquidation that found responsive buyers near the prior day’s pull-back low at $4,120.00. 

As noted in the past few commentaries, U.S. equity index futures are best positioned for balance (i.e., sideways trade) or further upside into Friday’s monthly options expiration (OPEX). Afterward, all bets are off. The potential to correct into the poor structure left behind by the prior week’s price discovery increases dramatically. Spending any considerable amount below the high-volume area (HVNode) at $3,900.00 would change the near-term bullish tone.

Option Expiration (OPEX) Significance: Option expiries mark an end to pinning (i.e, the theory that market makers and institutions short options move stocks to the point where the greatest dollar value of contracts will expire worthless) and the reduction dealer gamma exposure.

More On Volume Areas: A structurally sound market will build on past areas of high-volume (HVNode). Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area (LVNode) which denotes directional conviction and ought to offer support on any test). 
If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high volume for favorable entry or exit.

For today, participants can trade from the following frameworks. 

In the best case, the S&P 500 trades sideways or higher; activity above yesterday’s fairest price to do business, $4,137.00, targets the $4,143.75 regular-trade high (RTH High). Initiative trade beyond the RTH High could reach as high as the $4,152.00 and $4,162.75 price extensions. In the worst case, the S&P 500 trades lower; activity below the regular-trade low (RTH Low) at $4,113.00 targets the $4,104.00 spike base and $4,092.50 untested POC (VPOC).

More On Spikes: Spike’s mark the beginning of a break from value. Spikes higher (lower) are validated by trade at or above (below) the spike base (i.e., the origin of the spike).

POCs: POCs (like HVNodes described above) are valuable as they denote areas where two-sided trade was most prevalent. Participants will respond to future tests of value as they offer favorable entry and exit.
Graphic: 4-hour profile chart of the Micro E-mini S&P 500 Futures.
Graphic: Physik Invest maps out the purchase of call and put options in the SPDR S&P 500 ETF Trust (NYSE: SPY), for April 14, 2021. Activity in the options market was primarily concentrated in short-dated tenors, in strikes as low as $364, which corresponds with $3,640 in the cash-settled S&P 500 Index (INDEX: SPX).
Graphic: SHIFT search shows that trade in the SPDR S&P 500 ETF Trust (NYSE: SPY) lacks duration. This could be construed as the absence of directional commitment.

News And Analysis

Markets | Wall Street banks pivot from pandemic to boom times. (Axios)

Markets | Chinese fund jumps 258% after ditching Dalio playbook. (BBG)

Economy | Consumer, main street demand for loans is lacking. (REU)

Economy | Freddie Mac sees rates and prices leveling off into 2022. (MND)

Economy | Biden infrastructure plan to boost growth, employment. (Moody’s)

Economy | U.S. economy gaining momentum, consumers confident. (REU)

Economy | U.S. import prices increase solidly, boosting inflation. (REU)

Politics | Biden to hit Putin with Russia sanctions after summit offer. (BBG)

Markets | BlackRock assets hit $9T on stimulus, vaccine hopes. (BBG)

Markets | Cathie Wood’s ARK buys into Coinbase, sells some Tesla. (REU)

Markets | VanEck launches new digital asset-focused ETF on Nasdaq. (TB)

What People Are Saying

Innovation And Emerging Trends

Supply Chain | Kroger launches a massive robot-filled fulfillment center. (TC)

Automotive | Ford takes aim at Tesla, GM with its autonomous system. (TC)

Crypto | AXA allows customers to pay insurance premiums in bitcoin. (TB)

FinTech | One Finance CEO eyes massive overhaul of digital finance. (Fox

 About

Renato founded Physik Invest after going through years of self-education, strategy development, and trial-and-error. His work reporting in the finance and technology space, interviewing leaders such as John Chambers, founder, and CEO, JC2 Ventures, Kevin O’Leary, Canadian businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others, afforded him the perspective and know-how very few come by.

Having worked in engineering and majored in economics, Renato is very detailed and analytical. His approach to the markets isn’t built on hope or guessing. Instead, he leverages the unique dynamics of time and volatility to efficiently act on opportunity.

Disclaimer

At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.

Categories
Commentary

Market Commentary For 1/8/2021

Notice: To view this week’s big picture outlook, click here.

What Happened: Alongside hopes for more stimulus spending to help the U.S. recover from the pandemic downturn, U.S. index futures established a new all-time high in the overnight session, before backing off into prior-range and -value.

What Does It Mean: After the resolve of a long-liquidation earlier in the week, the market is in price discovery mode, trending to establish balance, or two-sided trade.

What To Expect: Friday’s regular session (9:30 AM – 4:00 PM ET) will likely open close to prior-balance and -range, implying higher volatility at the open.

Few dynamics to note: (1) poor structure in prior sessions, as evidenced by the low-volume areas (LVNodes) in the graphic above, (2) divergence from developing value, (3) a new overnight all-time high (i.e., historically, there is a low probability that overnight all-time highs end the upside discovery process), as well as (4) unsupportive speculative flows and delta in some instances.

Given the above dynamics, the go/no-go level for upside in the S&P 500 is the $3,817.75 overnight high. The go/no-go level for downside is the low-volume node at $3,787.50, an area that denotes upside conviction. On any virgin test, the S&P 500 ought to find support at this LVNode. However, should the index break below that level, then conviction has changed.

In a failure to break either go/no-go level, the normal course of action would be responsive trade.

Noting: Since the prior day’s range is close by, any acceptance (i.e., at least one half-hour of trade) of price within prior value reduces the odds of a dynamic move.

Levels Of Interest: $3,817.75 overnight high and $3,787.50 LVNode.