SPX Gamma Wrap
The financial sector (+3.2%) pulled the overall market higher today and helped the SPX to produce a profit of 1.9 percent on Monday.
A raised net interest income outlook from JPMorgan was the reason behind the outperformance of the banking sector, other supportive factors were speculation about a deal between broadcom and Vmware and the acknowledgment by President Biden that he is considering lifting some Chinese tariffs to help ease inflation pressures.
Separately the White House walked back comments from Biden regarding a military intervention to defend Taiwan in the event of an invasion.
According to Raphael Bostic the President of the Atlanta Fed, monetary policy could take a temporary pause if necessary, which was construed as a first sign of a potential off-ramp by some.
In the after market selling pressure increased, after Snap imploded 22 percent on lowered guidance, dragging down other online stocks (FB -6.7%, GOOGL -3,6%, TWTR -3,6%, etc).
Tomorrow Investors will receive a couple of prominent data points, which could spark further impulses. Keep an eye on New Home Sales, Markit PMI, and commentary from Powell and Lagarde.
Gamma discussion:
We continue to see 4000 as the main resistance level and 3900 as near-term support. Should the market clear 4000 then the next upside target is 4100.
At 4285 the gamma environment would flip positive and dealers would add much needed liquidity.
Total implied dealer gamma registers at -736MM, up from -1,308MM only three days ago, which means market participants are significantly less hedged now as they were before OPEX.
This coupled with an unnatural low VIX opens up downside potential in our opinion and we advise to stay cautious.
A raised net interest income outlook from JPMorgan was the reason behind the outperformance of the banking sector, other supportive factors were speculation about a deal between broadcom and Vmware and the acknowledgment by President Biden that he is considering lifting some Chinese tariffs to help ease inflation pressures.
Separately the White House walked back comments from Biden regarding a military intervention to defend Taiwan in the event of an invasion.
According to Raphael Bostic the President of the Atlanta Fed, monetary policy could take a temporary pause if necessary, which was construed as a first sign of a potential off-ramp by some.
In the after market selling pressure increased, after Snap imploded 22 percent on lowered guidance, dragging down other online stocks (FB -6.7%, GOOGL -3,6%, TWTR -3,6%, etc).
Tomorrow Investors will receive a couple of prominent data points, which could spark further impulses. Keep an eye on New Home Sales, Markit PMI, and commentary from Powell and Lagarde.
Gamma discussion:
We continue to see 4000 as the main resistance level and 3900 as near-term support. Should the market clear 4000 then the next upside target is 4100.
At 4285 the gamma environment would flip positive and dealers would add much needed liquidity.
Total implied dealer gamma registers at -736MM, up from -1,308MM only three days ago, which means market participants are significantly less hedged now as they were before OPEX.
This coupled with an unnatural low VIX opens up downside potential in our opinion and we advise to stay cautious.
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