Home Market Market Mayhem As ‘Gamma Hammer’ Sparks Post-Powell-Puke

Market Mayhem As ‘Gamma Hammer’ Sparks Post-Powell-Puke

49
0
market-mayhem-as-‘gamma-hammer’-sparks-post-powell-puke

We warned earlier in the week that Friday’s $2 trillion gamma expiration would spark chaos

According to an update from McElligott, a massive ~35% of SPX options Gamma will drop-off tomorrow, 52% of QQQ, 61% of IWM and 54% of EEM.

These are staggering numbers and explains why we had a market-wide gamma meltup this morning, which however is set to end with a bang tomorrow when it all reverses.

the poster-child in this latest iteration of the Equities ‘Short Vol’ movement – the ‘Gamma Hammer’ – was back both before-and-after the Fed and selling even more short-dated SPX strangles, which in-turn, back-filled the Street with more “Gamma” and created Equities to BUY into any pullback…

INSERT NASDAQ INTRA CHART WITH ARROWS

Yet while massive gamma selling explains today’s meltup, tomorrow it’s an entire different ballgame, and as our friends at spotgamma note, once most of the gamma gravity is gone (when it expires tomorrow), the gamma goes into reverse, and as SpotGamma’s EquityHub view shows, we are looking a substantial downside risks… which is what it looks like was front-run today.

…and combined with Powell’s panic-inducing statement/comments/walkback

http://feedproxy.google.com/

Source: Bloomberg

Chaos we got.

A glance across asset classes from the FOMC statement shows just how much damage was done and cognitive dissonance was lanced from the markets.

http://feedproxy.google.com/

Source: Bloomberg

Equity markets were all ‘gamma’ all the time with wild swings ahead of tomorrow’s quad witch. This is performance from just before the FOMC statement – Nasdaq is the major winner, Dow and Small Caps the biggest losers and S&P could not get back to even…

http://feedproxy.google.com/

Dow broke below its 50DMA today…

http://feedproxy.google.com/

Major value to growth rotation today…

http://feedproxy.google.com/

Source: Bloomberg

“Most Shorted” Stocks were squeezed higher twice today…

http://feedproxy.google.com/

Source: Bloomberg

Another crazy day in Vol-markets…

http://feedproxy.google.com/

Did we just reach peak gamma, peak bullshit, peak inflation, and peak liquidity all at once?

Ask the bond shorts!!! Bond yields utterly collapsed today at the longer-end (5Y +9bps, 30Y – 11bps since pre-FOMC)…

http://feedproxy.google.com/

Source: Bloomberg

With 30Y leading the charge (that is 17bps from high to low)…

http://feedproxy.google.com/

Source: Bloomberg

…crashing to its lowest in 4 months (today was biggest daily yield drop since Nov 2020)…

http://feedproxy.google.com/

Source: Bloomberg

10Y yield erased all of yesterday’s move and found support around 1.50%..

http://feedproxy.google.com/

Source: Bloomberg

And the yield curve (5s30s) plunged – now flatter year-to-date…

http://feedproxy.google.com/

Source: Bloomberg

Inflation breakevens crashed to their lowest since mid-Feb…

http://feedproxy.google.com/

Source: Bloomberg

Bank stocks broke down as the yield curve collapsed…

http://feedproxy.google.com/

Source: Bloomberg

The dollar extended yesterday’s surge higher (up for the 5th straight day). This is the biggest 2-day surge in the dollar since March 2020

http://feedproxy.google.com/

Source: Bloomberg

The Dollar Index broke through its 50- and 100-DMA and found resiatance at the 200-DMA…

http://feedproxy.google.com/

Source: Bloomberg

Cryptos puked with ETH leading the chunder…

http://feedproxy.google.com/

Source: Bloomberg

And as ETH underperformed – it’s at a critical level of support relative to BTC…

http://feedproxy.google.com/

Source: Bloomberg

Commodities were monkeyhammered today – this was the biggest daily drop since March 2020..

http://feedproxy.google.com/

Source: Bloomberg

Crude crashed back below $70 briefly…

http://feedproxy.google.com/

Gold was clubbed like a baby seal (breaking down below its 50,100, and 200DMA)…

http://feedproxy.google.com/

Real yields spiked (weighing on gold)…

http://feedproxy.google.com/

Source: Bloomberg

Copper shit the bed…

http://feedproxy.google.com/

Corn was crushed…

http://feedproxy.google.com/

Soybeans slammed…

http://feedproxy.google.com/

Finally, it could be worse…. you could have bought TITAN…

http://feedproxy.google.com/

Just what do the four ugly old ladies have in store for us tomorrow after today’s chaos!

http://feedproxy.google.com/

Good luck!