Overall price stability in the S&P 500 is masking one of the most unusual equity environments in recent years. While SPX has been roughly flat over the past month, the average constituent has moved 10.8% — a 99th percentile dispersion reading, as we discussed in our Thursday AM Founder’s Note. All signs point to increasing fragmentation beneath […]
FOMC
The Market’s 0DTE Underbelly Is Exposed
Last week reminded us just how fast market stability can give way to volatility. After trading near all-time highs at 7,000, the S&P 500 fell 3% in just three sessions, closing Thursday at 6,798 amid weakness in software and crypto. Our last Sunday Newsletter focused specifically on how this type of fragility underscores today’s market. This […]
SPX Touches 7,000 and Cracks — What Makes This Market So Fragile?
Market Fragility in the Face of All-Time Highs As the S&P 500 pushes record highs, the options market continues to flash warning signals beneath the surface. Underlying risk from volatility discrepancies and index-equity correlation suggest an environment prone to vol spasms — similar to what we witnessed with Thursday’s (1/29) sharp selloff and reversal. These […]
Vanna Fuels Market Rally as Market Fears Subside
Last week began with fear dominating market sentiment: analysts widely attributed Tuesday’s 2% SPX selloff to Greenland worries and tariff threats. As we pointed out in last weekend’s newsletter, traders had begun hedging against downside risk as put skew increased and volatility premiums rose. However, the quick turnaround back to SPX 6,900 seemed to erase any […]
Defensive Positioning Emerges as Market Rallies
Traders Turn Defensive In the Face of Market’s Climb SPX tested fresh all-time highs last week, with positive gamma providing guardrails for the broader market. In the face of headline noise—from criminal investigations into Powell to Iran-related escalation—the market absorbed every dip, with the 6,890 Risk Pivot level from Monday’s AM Founder’s Note holding firm. However, increasing put skew and […]
FOMC Reset: Vol Crushes, Stocks Lift Higher
Last week began with quiet anticipation of Wednesday’s FOMC. When the Fed announced the 25 basis point rate cut and Treasury bill purchases, the reaction was immediate. Equities surged, with the SPX breaking out above our 6,845 Volatility Trigger to approach all-time-highs near the 6,900 resistance level. The options market had priced in meaningful event-related volatility surrounding FOMC, and […]
December Rate Cut? What the Options Market Is Signaling
Using Options to Evaluate Rate-Sensitive Names With last week bringing realized volatility to the highest levels seen in 6 months, the market has entered a highly reactive state. Market events and data releases each have the potential to change the outlook for direction and volatility—and the December 10 FOMC remains the biggest date on the […]
The Oversold Stock Market Could See a Bounce
The following is a guest post courtesy of Michael Kramer of Mott Capital Management. The S&P 500 has fallen by more than 10% in the past two weeks, and to say that it is due for a bounce may be an understatement. The combination of a 75 bps Fed rate hike and massive June quarterly options expiration resulted […]
The Fed Meeting May Spark The Next Stock Market Rally
The following is a guest post courtesy of Michael Kramer of Mott Capital Management. Buy the Fed meeting. Sell the Fed minutes. It may be the name of the game for the stock market. At least since the start of 2022, the minutes have been a cause of concern for markets, while the FOMC meetings […]
Next Week’s Fed Meeting May Create Massive Moves In The Market
The following is a guest post courtesy of Michael Kramer of Mott Capital Management. Stock market volatility has picked up, and it may only be starting. Investors are eagerly awaiting the next FOMC meeting on January 26 to try and gauge which way the Fed may choose to go in its fight with inflation. With […]
