Published with permission from the options flow and sweep specialists at Sanglucci.com.
A slow, grinding overnight session led the SPY to a moot opening as traders prepared for the last day of action under President Obama. But with the transition of power there’s come a bit of uneasiness in markets as well. Though it’s not really a fear per say, a nervous anticipation has taken hold as everyone looks around waiting for someone to make the first move. And when it comes, it’s probably going to be ugly.
But since there’s still a few hours of calm before the storm, smart money did their best to get their hands on earnings related positions. Some even did a bit of hedging despite it being a quiet day overall. Everyone is firmly sitting on their hands waiting to see what comes first, as well as the pace, when it comes to Trump’s regulatory repeal promises.
And it’s weighing on markets as money managers all acknowledge that they’re holding positions that they would have normally cut in December as we all wait to see what the new tax plan looks like. After all, you’ve got to cushion those books however you can when you under-perform…..
Flow was dead today. There, we said it. Yes, there was some action around AA as smart money hit Feb and March call spreads with earnings next week. But otherwise, nobody is doing anything exciting.
And neither should you.
But while the sharps are sitting back watching the time pass by, TLT and VIX continue to signal some pain to come as sharks look to protect their backs. It’s going to be a February packed with some of the wildest headlines we’ve seen.
And then there’s the energy sector, which continues to trade in La La Land as OPEC sits quietly, waiting for it’s turn in the Trump Tweetlight. 140 characters to send crude back over $60, you heard it here first.
But until then, smart money is slowly keeping prices stable as they look for a spark to ignite the mother of all short squeezes.
Here we stand, just hours away from what could prove to be a historic moment in trading. Should Trump stay true to his word on this topic, it will mark a new age in markets and likely lead to a massive surge in liquidity. We could go back to being cool….
But the reality is nothing is going to change in the next 24 hours. So, here’s our advice on how to navigate this Inauguration thing.
Sit back, grab a 12 pack, and enjoy the show.
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