Was I wrong in my previous "SPY DIE" analysis?
Absolutely.
Was I expecting such a move to the upside?
Absolutely not.
Should I have expected it?
Yes.
Why?
Options positioning.
I will be transparent in that I learned a lot this past OPEX. Particularly during quarterly OPEX into one of the most important FOMC meetings of the year. People were overly hedged. There was a move to the downside initially yes, but everything then exploded upwards. Vanna + Charm flows are actually strongest during this three-day window of Vixpiry to monthly OPEX.
Structural supports were too strong for the bears and there was unfortunately an unwind of the said hedges that turned into a massive short covering rally for the ages.
Where are we now?
We're at an important level and point in time.
As mentioned previously, structural supports have faded after OPEX. That doesn't mean they're all gone, they're still very well propped up (most of it due to massive short covering). Outside of the massive short covering, we are now reaching important technical levels.
As seen, we've been making lower highs and lower lows since January. This remains the case until proven otherwise.
Bear market rallies are brutal, and this has been the case.
Seasonally, April is a hugely bullish month (green 80% of the time). We could very well track further up to match said seasonality.
Is that my thesis? No. I'm still bearish.
I'm positioned short. Again, do not overleverage.
You hedge by playing longs. If the trade goes against you, you simply ride up with your long hedges.
The 20sma is hugely important still. Bulls have been doing a great job in closing price above the 1 and 2 STD of the 20sma. They want to continue to maintain control above the 20sma. Closes below the 20sma during this time period before EOM flows can signal further downside to come. However, time is not a bear's friend, as Cem Karsan would say. The time period for bears to strike is in the next few days.
If bears can regain control of the 20sma within this window, the trend will remain as such (lower highs). If bulls can maintain, we can continue with said seasonality until mid to late April.
This is a critical juncture.
FED has been incredibly clear.
I doubt we see NEW ath's in the indices with rate hikes and balance sheet run-offs imminent.
Can we approach previous ath's in the next month? Absolutely.
Can't be dogmatic.
Don't fight the FED. But ultimately, don't fight the price.
We'll see if we can squeeze a bit more upwards.
I'm watching that SPY 458 level closely IF we even get there. Consecutive closes above that would be breaking our bearish trend.
Good luck friends.
Absolutely.
Was I expecting such a move to the upside?
Absolutely not.
Should I have expected it?
Yes.
Why?
Options positioning.
I will be transparent in that I learned a lot this past OPEX. Particularly during quarterly OPEX into one of the most important FOMC meetings of the year. People were overly hedged. There was a move to the downside initially yes, but everything then exploded upwards. Vanna + Charm flows are actually strongest during this three-day window of Vixpiry to monthly OPEX.
Structural supports were too strong for the bears and there was unfortunately an unwind of the said hedges that turned into a massive short covering rally for the ages.
Where are we now?
We're at an important level and point in time.
As mentioned previously, structural supports have faded after OPEX. That doesn't mean they're all gone, they're still very well propped up (most of it due to massive short covering). Outside of the massive short covering, we are now reaching important technical levels.
As seen, we've been making lower highs and lower lows since January. This remains the case until proven otherwise.
Bear market rallies are brutal, and this has been the case.
Seasonally, April is a hugely bullish month (green 80% of the time). We could very well track further up to match said seasonality.
Is that my thesis? No. I'm still bearish.
I'm positioned short. Again, do not overleverage.
You hedge by playing longs. If the trade goes against you, you simply ride up with your long hedges.
The 20sma is hugely important still. Bulls have been doing a great job in closing price above the 1 and 2 STD of the 20sma. They want to continue to maintain control above the 20sma. Closes below the 20sma during this time period before EOM flows can signal further downside to come. However, time is not a bear's friend, as Cem Karsan would say. The time period for bears to strike is in the next few days.
If bears can regain control of the 20sma within this window, the trend will remain as such (lower highs). If bulls can maintain, we can continue with said seasonality until mid to late April.
This is a critical juncture.
FED has been incredibly clear.
I doubt we see NEW ath's in the indices with rate hikes and balance sheet run-offs imminent.
Can we approach previous ath's in the next month? Absolutely.
Can't be dogmatic.
Don't fight the FED. But ultimately, don't fight the price.
We'll see if we can squeeze a bit more upwards.
I'm watching that SPY 458 level closely IF we even get there. Consecutive closes above that would be breaking our bearish trend.
Good luck friends.