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 Trump got busy on his first full day of work. The SPY saw an early wave of buyers eviscerated as news of America pulling out of TPP and NAFTA littered the headlines and spooked algos. But as always, calmer heads would prevail as the market would end up walking itself back towards unchanged as the day came to a close.
Today was largely a day of reckoning for smart money. They were handcuffed for the last 3 months knowing what Trump wanted to do, but had to wait and see what would make its way to actually being inked. As a result, in the heart of earnings season, today was a day full of protection buying as portfolios suddenly find themselves out of sync with macros once again. And to make matters worse, we’re all still eagerly waiting to hear more on the Tax Plan…
Flow was hit or miss throughout the day, but there was a steady stream of put buying in the ETF names we know and love. The SPY saw sharks come in and scoop up Feb puts as the session dragged on.
Gold and silver should continue to see inflows as the world worries about currencies imploding through all the macro hubbub. Shout out to the PESO which is probably going to see some pain later in the week as Trump meets with Mexico. (Mind you, Canada announced they’d do a NAFTA without Mexico.)
Overall, there wasn’t anything really notable about the flow today. It was truly a case of protection being put on as traders have no idea what’s coming next. This is trading. Back and forth action with plenty of opportunity.
If you’re paying attention, you’re starting to notice the SPY slowly drifting away from all time highs. Yup. The reality is, there aren’t very many headlines that are going to drive the market higher. At this point, it’s “watch your neck” time. A shakeout is coming, and the only important question is if we make it through earnings season before it happens.
So with that in mind, it’s probably best to choke up on your size. Maybe even cut down on your targets. There’s a lot of year left, and nobody wants to get caught in some early back and forth as smart money figures out what they’re looking to do.
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