Published with permission from the options flow and sweep specialists at Sanglucci.com.
An overnight full of action had night-desks waking up traders well before alarms this morning. It seems that the Chinese holiday has created a vacuum during the overnight that domestic firms plan on taking advantage of. The SPY would start the day slightly lower, but with the ringing of the opening bell things slowed down and a rounding took place.
Smart money spent the day continuing to play games with goldbugs. And of course, with Trump blasting regulations left, right, and center, it’s brought some heat over to the small caps. But the real story today is the strength in the gut of this market.
Pundits love talking about “what’s driving this market”. Well the answer is, the gut. It’s not the pretty tech names. Doesn’t matter what their earnings look like, everyone knows they’re trading on borrowed P/E’s. The game is played out. But, alpha is still floating around in the ugly names. The dirty jobs. Money managers. Smart money. People with a brain are incentivized to head where the strength is. Like attracts like, and for the next 4 years strength is going to draw more strength to the gut of this market.
Gold and Silver have quietly amounted to quite the trades already in 2017. Another year of a late December- February move has largely gone unnoticed among all the important talking points over the last 30 days. But again today sharks were buying GLD as they look to roll into further expirations for safety of time.
IWM is moving into a league of it’s own as smart money continues to dive into calls and buy more and more time. Small/mid caps are uniquely positioned to capture the brunt of the upside to this new “America First” mentality as Trump looks to force growth back into small business. Today a Jan18 call sweeper had scanners singing. That’s a lot of time premium…
And then there was TWTR. After months of slow, lifeless action, the social media name finds itself the target of some strong call sweeps as the equity drives higher. The reality is Jack’s got to go. But you do have to wonder at what point sentiment around the name is going to shift. After all, it’s still around. Totally the AMZN of social media play.
In a lot of ways today smells like the bottom of this nasty little downtrend we hit post Trump Immigration fiasco. That said, we are only a few points away from all time highs and you’d think that everything is basically priced in (and probably overpriced) at this point. So we’re looking to stay light and with the momentum. Small/mid caps and precious metals.
Over the next few day’s it’ll be important to see money rotate back into the banks. The SPY is going to have to draw strength from somewhere…
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