GAMMA GANG UPDATE

Posted on

We came into last week with gamma exposure for SPX at + $1.6b & we start off this week with a sturdy $1.5b, so no drastic change there .. Both SPY & SPX gamma reached a high enough level late last week where indices usually run into a little trouble & we often see some congestion in the price action for the indices .. that’s exactly what we witnessed to close out the holiday week .. From this point, expect more of the same is what I’m told with a little less of a magnetic force or edge .. Things could loosen up at bit, in either direction but a bullish lean remains .. The spread between volatility calculated off gamma & the VIX has closed a bit, so there may not be enough of an edge to aggressively short vol products .. But there’s still enough there for the grind to continue .. The outlook from the “gamma gang” remains unchanged, its gonna take a category 4 tape bomb or headline to get this animal rattled .. My takeaway for the way we intend to utilize this information to suit our trading styles & signals remains the same as well .. Continue to closely monitor sweeper activity for clues of possible momentum & rotation, as well as the possibility of sweepers flipping over to the “dark side” in an aggressive manner, which could signal the tide is turning .. Remain tactical, stay extremely nimble & there’s no reason to try & get cute or be a hero here.. SPX 3150 magnet/resistance was our key level to watch .. I’ll let you folks know if/when the level changes .. For now = “Stay nimble, stay bullish!”