Published with permission from the options flow and sweep specialists at Sanglucci.com.
A relatively quiet overnight session gave way to a wild morning as the opening bell brought with it a wave of selling pressure. Early action was met with weak bids that eventually went into hiding as algos drove the SPY straight down before smart money stepped up and caught markets.
Headlines remain a persistent presence in trading, but it was the EPA that had algos going wild early. Despite all the drama, smart money took the sell off as a chance to accumulate some more of the Trump Trades. In return, markets caught a bid off the dip buying and drove themselves back towards unchanged from the opening print.
As mentioned, it was the EPA that would have last laugh today after slapping FCAU with a Clean Air Act Violation. But with the news, we have today’s “who done it” moment. Smart money was front loading FCAU as put sweeps drove scanners wild early, and then the news hit to drive prices lower.
Anyone want to do anything about this?
Outside of front running news, smart money was busy positioning themselves in XLF ahead of tonight’s bank reporting. While it’s going to be interesting to see what the bottom lines have to say, we get the feeling that forward guidance is going to push indexes higher. Smart money is sure positioned for it.
The backside of the market saw another day of buying on CSX as investors grapple with the reality of production coming back to America, requiring transportation to reach the end consumer. The old days are kind of back. And there was some more buying on FB and FANG as smart money looks to keep momentum heading in a positive direction with just 8 days until a new administration is set to rip through policy.
Overall, despite the V-shaped action, today was largely another non-event. Premium and vol spiked and died as the SPY ran the range. And that’s the point. While you freak out over what’s going on around you, cooler heads are selling you positions you don’t really want.
So do yourself a favor, take a deep breath. Have a drink. Get some sleep. Do whatever you’ve got to do to clear your head because we’re 2 weeks into 2017 and already seeing way too much emoting for trading. Hell, maybe you even want to cut down on your size and stop blindly buying AAPL calls.
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