 Hey everyone Mayhem here gonna talk a little bit about how I approach trading futures and Some of the things that I look at to find co-lessons Now I see that Got some folks out here on YouTube. Thank you so much for tuning in I know I took a little break from here and I'm back I'll be back every Tuesday at 9 a.m. Eastern to talk about what I'm looking at in the market So appreciate you all tuning in you can set your calendar to next week at Tuesday 9 a.m I'll be back. But first before we dive in let's talk a little bit about kind of how I Got started in this game. So I am a self-funded trader I've been trading my own money since 2005 started investing in 2006 just some of my first trades with Money I had borrowed from my father I'd started working at a young age, but I borrowed because I couldn't as a young as a someone who's under 18 trade the market myself So I bought some Yahoo. I bought some Amazon. They doubled the next day. I didn't know exactly what was going on with that didn't really Let's say Understand it and so I stepped away because I felt like at that time if everyone could double their money in the market Then why would anyone work right if you double your money the next day? Why would anyone work right? You just go to the bank borrow some money put in the market so even as a young person I had some sort of I Guess need to understand a little bit more about how this works before I just sort of sunk my teeth into it And of course this was during the dot-com mania that that was happening with those stocks double So it was very unusual was not how things should trade And so I took some time to study to step back and I started trading my own money in 2005 Opened an account at Scott trades started trading stocks and then equities then eventually worked my way up to futures and forex and you know Moved on to interactive brokers, but I've been very passionate about learning about technicals macro How they come together and then finding different areas of convergence that can increase my confidence in a trade So here's a little bit more about me. You can find my work at trader a calm That's where I'm talking about Education I build trading tools including one that's coming out on book map soon that we'll talk a little bit more about later and I also share trading ideas one of the ones I just exited was Zim We got in that one just over eight bucks just got out at 1466 yesterday There's been a lot of squeeze trades like this that I've been eyeing where there's a catalyst where there's a You know a setup where a lot of people are betting against it Mara was another was a near triple in about a month that we identified and traded and that's exactly the kind of Stuff we do at trader aid we help people get better at being traders But we also identify Possibilities in the market and we have different unique tools and one of those I'll show you Macrovisors where I help people learn more about the big picture and how that translates into long-term investing themes So we've got a number of good stocks that we've been talking about there And Nintendo has been one f5 networks and others that we've identified over time And this is all about kind of taking the momentum element and the bigger picture Combining them to understand how that can drive better returns and uncorrelated returns with the broader markets You can find me on my own YouTube. That's mayhem for markets at youtube.com slash at mayhem for markets I just released a video about the psychology of trading that I highly recommend checking out regardless of your skill level We can always learn and improve and this video is all about being Sustainable over the long term the mindset and some of the practices that can help with that And then finally if you'd like to get up to 40% off of book map go to a trader aid comm slash book map That's trader aid comm slash book map and you can get up to 40% off on your plan So let's read the fine print. This is why everyone comes to watch the video so they can hear me read the fine print here So all book map limited materials information and presentations are for educational purposes only and should not be considered specific investment advice nor Recommendations trading futures equities and digital currencies involve substantial risk of loss It is not suitable for all investors past performances not necessarily indicative of future results So now that I've read that everyone can go that was everyone's favorite part, right? Just kidding. So let's talk a little bit about options positioning across the S&P Right now. We've got a huge amount of open interest at 5,000 now This is open interest that is for later this year and next year. So it's not exactly imminent So it doesn't have the same kind of magnetic effect that it may otherwise But we also have a pretty good amount of open interest below us at 4900 which is likely to act as support I don't see the market necessarily pushing below there without a powerful catalyst for that to happen So that's just something to contextualize, you know, obviously we have some potential catalysts for moves in both directions this week You know, we have major earnings reports coming out including today We've got some of the majors, you know, basically 10 trillion dollars or the magnificent five Reporting this week and that's gonna be a pretty big deal to keep an eye on you know Today we have Microsoft AMD alphabet or everyone really knows them as Google I think those are gonna be the most important earnings that everyone's watching and then of course on Thursday We have Apple Amazon and Meta as well as some other popular stocks like Atlassian So this is the biggest week of earnings for earnings season. We've also got the Fed Tomorrow got a lot of labor market data including later today 10 a.m. We've got jolts coming out, right? So there's a lot of moving parts here and we'll talk a little bit more about what I'm eyeing as we go through But options positioning at least suggests that SPX for 4900 or ES about 4924 that that could be an area potential support here if we see this Pre-market drawdown continue into the cash session So let's talk a little bit about positioning and flows for a moment We are in the greed zone in terms of how people are expressing themselves the ratio between the high beta and low vol Strongly suggests a very very powerful appetite for risk here Now that's fine in the sense that we are in a place where you know risk taking has done well people who have been taking Risk in high beta stocks particularly these you know large cap and mega cap growth stocks have done very well At the same time when the chart tends to get down to this ratio like we saw at the end of 2024 Sometimes we do see some corrective impulse some rotation back into some more safer parts of the market So this is not an area where for swing trades. I'd be looking at adding long as so much I'd be looking at potentially raising some cash just because of these dynamics now obviously depends on what factors and sectors I'm long, but if I'm long high beta tech, I'm probably going to be more interested in taking some profits or potentially hedging At the same time some of the lower volatility defensive names because of this ratio could start to become a little bit more attractive If they're individual technicals set up well, and there's a catalyst So consolidated equity positioning this one comes to us from Deutsche Bank It shows us that we're in quite a long market, but we're not stretched long From positioning, right? This is one measure. There's several different measures different banks have different client composition So you're gonna see different lenses on this Right like we saw NASDAQ positioning was at an ad or near five-year highs We saw aggregate positioning across Goldman's equity futures is at like five or six year highs So it depends on where you look as to what you see, but this particular measure at least suggests We're not super stretched right in terms of positioning and that's good We can contextualize that with some of the the data that I'm going to show next as well So total net call volume it is on the rise. This is showing us calls minus puts now Obviously, we don't know if they're buying to open or selling to open But most call volume is going to be by to open So this tends to be a sign of a more bullish impulse indeed last week We saw the equity put call ratio dip below 0.5 that was telling you there was more than two calls for every put being Transacted at the CBOE again often a sign of some degree of optimism or euphoria when you see that And we have skew here skew is on the rise. What this is indicative indicative of is a better hedged market, right? So we saw the net positioning That's important to contextualize but we also have this measure that's telling us This is not a market that is only concerned about upside There is some effort to hedge against downside risk in this market So I'm gonna take a quick pause. I see there's a comment in the YouTube. Let me check on that So BTS I don't have Sierra chart on this system I use book map and motive wave But if you want to tell me a little bit more about what you're looking for perhaps next time That's something I can look into But back to this screen. So for folks that may not fully appreciate what skew is skew is the difference between the amount of premium being paid for puts versus calls on the S&P This index is dollar sign skew on stock charts. It's a great easy way to get a sense as to whether the market is You know really really euphoric or whether there is a little bit of insurance happening here So, you know, the greed chart shows greed, but at least we're not greedy without Appreciation for downside risk. That's why this chart is helpful because now we're back in that period of time Well, we're gonna start to see some of those passive flows from the decay of this same positioning Actually bidding up the market. So what gem Carson is talking about when he talks about Vanna and Charm flows this Decay of Delta and fade up bidding up the underlying which would be S&P futures as dealers are Unwinding some of those hedges. We have a lot of fuel for that. This is a market where the hedging You know, it is enough that it could help to push that sort of passive bid or that buffering From that decay of the value of these put positions So we have the Nasdaq McClellan oscillator on screen here showing that we've moved back in a positive momentum and breadth in the Nasdaq I'm focusing on the Nasdaq a little bit more because it has been the leader It tends to lead intraday over the week over the month over the year, you know on multiple time frames So I like to focus on it for momentum And we do see momentum starting to turn back positive in the Nasdaq again So it's something we should contextualize obviously There's a lot of moving parts this week with the amount of tech earnings that we have not just from the so-called mag five But a lot of other companies reporting this week So I think that you know, this could go either way you have tails in either direction That is to say you have the potential for larger moves in either direction on a week like this and The Nasdaq number of stocks above the 20-day moving average has pushed higher It's now at just above 54 percent 54 point 48 This is another sign of a positive push higher in breadth You've got more issues in the Nasdaq that are climbing above their 20-day moving average You know, this is not in any way an exhaustive reading yet that tends to be over 60 So this is still healthy It still gives you a sign that over a longer time frame There is more constructive price action happening here and that's supported by some of the other data We're seeing as well. This next chart is the number of Nasdaq new highs versus new lows and What you're seeing here is a hundred and fifty eight new highs and excess of new lows in the composite over the last week So that's going back to last Tuesday through the present You know, that's showing us again That there is constructive price action that there are more highs happening in the Nasdaq than lows Which is what you want to see in a market that's Gracing or or making new new all-time highs, right? You want to see that push from a broader number of issues also making new highs So jolts is going to be the key data point today That's coming up at 10 a.m. I think that's really going to be what Drives any kind of volatility in this market and there's really two ways to look at jolts, right? So the the expectation is about eight point seven five million a Number that's much higher than that that is to say if the number of job openings is much stronger Then we would probably look for an upside move in rates and a downside move in risk So that would mean bonds and stocks dropping if Jolts is meaningfully higher than expected for me that magic number is probably nine million and above The other side of that is if it comes in at eight point five million or below That would be something that I think you'd see rates drop and risk get bid further Okay, so coming into this We're looking at a number that if it deviates around 250,000 either way That could be a catalyst now This is not to say that we're pricing in the macro immediately This is to say that there is hedging into this and how the number plays out could have a big impact on that hedging So we're in a well hedged market environment going into jolts We want to take that into consideration because if this number comes in at expectations You could still have a decent bid as some of those hedges are unwound potentially, but if it comes in much lower than expected I think you'll have not only hedges unwound But folks buying in under the presumption that you're getting more data from the labor market giving the Fed and all clear Ahead of their meeting tomorrow, right? Because right now the Fed is meeting they meet for two days They meet on Tuesday and then Wednesday and then they come out on Wednesday They make their decision and then there's the press conference with the chair which in this case would be Powell So right now they are still deliberating. I don't see any chance of any cut tomorrow, by the way like zero percent But what I do think is important is how they contextualize Policy moving forward. Are they going to talk more about, you know, we're done with the hikes or are they going to leave the door open? That's going to be pretty important for how the market reacts and so will Powell's demeanor in the way he approaches policy And even the balance sheet during his press conference. So let's move on to some charts This is a chart of the S&P 500 futures now Obviously, it's not current to the minute, but I took this, you know about 30 40 minutes ago And it just looks a little bit stretched here. It doesn't look bad Momentum is very much on the side of the bulls here or above the 20-day moving average RSI is a little bit exhausted. Sorry about that. Just went back. I'm going to push that back forward here But everything on this chart from a momentum perspective looks pretty constructive. RSI did get a little bit Overbought but overbought in the context of an uptrend is not that meaningful Things can stay overbought for quite some time So it's just something to uh To take into consideration when you know, you see all these folks saying, oh, you know, RSI is saying we're overbought Well, if you're in an uptrend, that's not that meaningful It's actually much more important in an uptrend to see RSI oversold As a potential area to add to a position just like during a downtrend seeing RSI is overbought Can be a good place to look at shorting or you know adding to a short or whatever However, one may be trading that type of environment, right? Maybe if you're counter trend trading taking off that long But I like to add some nuance to these momentum oscillators because I often see that the way they're used is It lacks some of the context for how the underlying instrument is trading And you can back test this stuff. So don't just rely on what I'm saying and obviously different instruments Have different personalities. I'm contextualizing this based on my experience with the s&p You might find it behaves completely different with whatever your favorite trading instrument is Speaking of favorite trading instruments, here is the NASDAQ, which has really become everyone's Favorite trading instrument. This is the futures contract for the NASDAQ 100 And like the s&p it does look a little bit stretched, but it doesn't look terrible, right? It still is very much in favor of the bulls or above the 20 Or above the value area. So you could say we're a little bit stretched if you're looking at this from auction theory We have kind of traced back down below that, you know, so-called overbought condition on the rsi that I was talking about Overall, it doesn't look bad. Just looks like maybe we get a little bit of a retrace to the lower end of the range here Before we move higher But overall, this is a week full of so many catalysts that it's hard to get any real strong sense of Directionality before we see how some of these things play out Earnings the fed labor market data being the most important catalysts Now this is a price chart of crude oil. This has been on the minds of many We are back in a very key area here between 75 50 and 76 This is kind of going to determine whether or not we are really reversing and starting to break out We have to hold here. We have to build and we have to grind higher now rsi and You know, the overall momentum in the trade is in favor of that We did have this breakout as you can see from the blue line. We're above the point of control So bulls still enjoy Odds in their favor here But this is also a market where there have been a number of different catalysts and it just couldn't get much of a bid So i'm not terribly optimistic. I am constructive I like energy stocks more than I like oil itself here So if I want to express a positive opinion in oil, I'd rather get long some of these energy stocks or even the sector etf like xle or xop Then actually getting long crude itself And that is because I've seen more relative strength In the stocks and in the sector as a whole versus the commodity Which tells me I'd rather have my money there where the strength is. I'm not really looking for that mean reversion trade Now on the other side of this if we can really build here And move above 76 and continue pushing above the most recent high I think 85 dollars is in the cards for crude Right just looking at that over the next several months And with the sort of catalysts we have behind it. That's where my that's where my thought is now we're about Just uh over seven minutes away from the open So i'm going to get through the rest of these charts and then we're going to go right into book map Where I have a number of different instruments that we'll take a look at including everything i'm covering and more Next chart we have here is gold And gold's not really Doing much now the price action that we've seen recently is encouraging Right, we did have this breakdown from an uptrend now We're in a mode of what I would consider to be consolidation And you can see that trading range we've been in for most of 2024 We did just break above the 20 day moving average. We do See rsi perking up. We're above that point of control as well over this time range on the chart So it's starting to look a little bit more constructive, but I'd like to see some build here I'd actually like to see oil or i'm sorry gold trading above 20 60 on a closing basis before I get more constructive about this potential bottom But I do think that we're starting to see some signs here that you know, this consolidation phase wants to lean higher So let's see where it goes. There's no trading here yet, but maybe today's price action gives us a clue And we've got the 10 year note futures here It had a nice little breakdown from its uptrend that started in october Now it appears like it's it's almost trying to bull flag here Obviously, we have to see what the fed does tomorrow that'll probably give us a Pretty good idea as to what happens with rates similar with labor market data Including to some extent jolts today, you know, it can have an impact on these longer end rates So that and then of course we get from the treasury department the composition Of their debt issuance, which will also be important for markets to digest, you know More longer duration tends to be more of a liquidity vacuum more bill issuance tends to have a very de minimis impact And here's the u.s. Dollar index. It's just sort of grinding up against this point of control It did break out of its downtrend rsi and you know above 50 and kind of consolidating but also above this 20 day moving average I'll suggest that We could still see some upside from here, but again Caviar being the fed and labor market data Those are going to be really important for the dollar and for the biggest cross pairs, right? Which are the yen and the euro which I watch closely on book map those contracts are pretty liquid. They can be pretty interesting So that's everything I have on my presentation. We're going to now switch over to book map And uh, we'll go over to the spooze here or the es contract Now before we dive into you know, kind of what I'm seeing on screen here I wanted to just show you these labels on the lower right These are added in from my spx options visualizer. This plugin will be going live on the book map marketplace I believe this week And this data is refreshed throughout the cash session when cboe options are trading every minute So once we have enough volume the labels populate and they can be pretty helpful For seeing where there's these convergences between resting liquidity Where price is currently trading and where there's options flow and positioning, right? You put it all on one screen. It becomes a pretty powerful tool So on screen, we do have the s and p. We are getting a little bit of a bid back here pre-market We can see as i'm zooming out just into back to aam It's been a bit of a choppy trade, right? This this hasn't been a particularly Directional trade pre-market. We're just sort of grinding up and down. We did get some Economic data not too long ago. Let's see how that came in. So we got k shiller home price month over month And the actual number was actually home prices falling 0.2 Forecast was for rising 0.2 percent year over year number came in just slightly below the forecast at 5.4 versus a forecast of 5.9 So nothing too major there. Let's just take a look At hpi hpi also came in pretty much within expectations at 0.3 percent So not too much of a reaction to the data that data point as you can see with my crosshair came out at 9 a.m And we see just a little bit of a bid Towards some of this resting liquidity up here. You've got over 600 contracts of 651 just Hanging out this resting offer. Let's have a pretty chunky resting bid at 49 40 Let's take a look at the nasdaq here the nasdaq obviously the more volatile cousin Similar look though kind of just chopping around more downward directional bias from the nasdaq overall And i'm going to zoom these in just a little bit. I like to keep about A half hour on screen not too much more than that Just my own personal preference obviously whatever works for you Good morning demo trader. How's it going? Let's take a look at crude we're building here from the lows This is a great look It's exactly what you want to see if you're bullish of oil here So we do have that build off the lows and crude, you know, I Think that and I might be early on this. I do think crude is bottomed. Obviously. I need to see it Close above 76 again. We seem to be on track for that outcome. Let's see how we trade this today But this should be bullish for energy overall If we can continue this momentum Gold similar look just grinding higher here About uh 14 bucks early from these lows 13 Not the most liquid trading though. This this contract Is is quite illiquid overall Here's our tenure note futures. This one doesn't tend to move much. There's so much liquidity in the book I mean contrast this with gold. You've got 600 000 order book depth, right? And gold you've got 300 as in just 300 It's quite a difference meaning it takes A lot less volume to push gold all over the map And you can see that that liquidity here in the treasury contract those thousands and thousands of contracts Particularly right around price. So it does take a decent amount of money to push rates around This is the 30 year Bond futures contract similarly quite liquid not as liquid as the 10 this one's got about 160 000 contracts And then this is the euro futures contract because it is helpful to watch How a lot of these different things are trading because they all tend to have an influence on other areas of the market So dollar weakness obviously means a strong euro the euro is about 70 of us dollar index waiting So understand how it's trading gives you a sense as to how the dollar is trading and then I also like to have the end futures On screen for similar reasons right the end is another big chunk of the us dollar index So seeing how it's trading can help also, you know, the yen has been a really interesting trading vehicle in and of itself So we see a bid here as we're starting the cash open It's happening now. You can imagine the bell ringing If you have any questions, feel free to drop them in the youtube channel or on the book map discord. Just tag me in You can see some more liquidity appearing above us here. This is typically bullish when you see that liquidity appearing above Especially if you start to see some kind of fade below and you see a little bit of that but that 431 contract offer up here that is constructive to see what the price action pushing there Let's see what we can do to move up above there We don't have too much institutional passive buying here icebergs are about flat stops are about flats We don't see too many people getting pushed out of their positions to the upside either So this is more natural buying this is more buying of the underlying NASDAQ quite a similar look there as well Not quite as much conviction as we saw the larger amount of volume in the s and p futures But still a pop out of the open Oil continues to move sideways to higher still looking pretty constructive Gold rolling over just a little bit at the open here, but still again going back here. You know, this has been a pretty nice little move for gold so Just contextualizing that pretty flat action and rates. You got to really zoom in to see these things move sometimes So we'll go back to the s and p here. Take a look at the news. See if there's anything interesting going on There's about a 245 million market on open imbalance to the buy side perhaps accounting for some of that buying The commander of the yemeni huthi forces has said that the group is ready for a long term confrontation You know again the the situation there is a Generally a positive catalyst for oil but more than that for shipping rates And for some of those shippers that was one of the reasons we had a catalyst for that long zim Short squeeze trade the stock is down Today, I've taken off my core at 1466, but I still have runners on And I'm guarding that with the 200 day moving average So when we zoom out on this s and p contract here, we can see there's a much larger area of resting liquidity above us as well These two stacks of contracts over 500 Just around 5000 just above 5000 So maybe we get to take out our s and p futures 5000 as well showing they're willing to You know take contracts off even during the pre-market and globe x session Now you can see we're pulling up the point of control here. That's pretty bullish to see more acceptance up here You also have cvd or that cumulative volume delta becoming more positive again more signs of actual buying happening In this market, we do need to push above this level of resting liquidity right above us However, it is large enough that it could act a little bit like resistance. So let's see how price reacts to it And we just gobbled it up So this makes it more likely in my view based on we're seeing more resting liquidity up here above us that we might make a Further push higher here You know, maybe we get another eight handles out of this to gobble up that resting liquidity up here And you think about it from auction theory, you know the market wants to transact And so you've got folks out here saying i'm willing to sell here. I'm willing to buy here You have a market that wants to fill those orders particularly an order book like today It's not super liquid 40 000 order book depth on the s and p e many futures is not super liquid And makes it more likely that you see these resting bids and offers having a bigger magnetic effect And the way that effect tends to take place is you have to have momentum in your favor And then you start to look for that build like for example in this case on a day where we're moving higher That build of offers above and above and above And then you also want to start to see some of the people pulling their bids from below or raising them So we'll check in with the nasdaq nasdaq's retracing just a little bit here And the nasdaq is an interesting beast because it doesn't typically have This same amount of resting liquidity right not only is it a much thinner trader You know, this is just about what 5.6 thousand order book depth So like a fraction of the s and p but also has much less impact from options trading and the hedging flows from market makers So you just don't see as much and it's one of the reasons it's a higher beta Trading vehicle as well because there's less of that overall vol suppressing activity happening with all the options trading that happens in the s and p Let's take a look at oil. Oil is continuing to grind higher here. Just that sort of stair step pattern overall looks pretty constructive This is another one where resting liquidity Doesn't tend to be as influential But when you do see a really big resting bidder offer in oil or the nasdaq or any of these others It's worth paying attention to because it's more rare. It's more important Gold moving sideways here after the open And rates just sort of grinding sideways to a little bit higher as futures move lower Let's take a look at the euro Euro's continuing to move higher here weaker dollars generally bullish for equity. So that's one of the reasons it's good to watch this chart Now we do have some interesting options activity happening this morning I like to look at some of the unusual flows Those flows are and i'm sure no one would guess this going into places like invidia and tesla Pretty unusually bullish flows in both Sometimes those can help to push the stock price higher Because if they're large enough the dealer hedging activity becomes influential in price discovery That is to say the dealer selling calls They've got to buy the underlying shares to be delta neutral. So they're not out a bunch of money if those calls perform You got some downside, maybe some hedging here in amazon As well, you have some heavy put flow there about 118 000 in premium paid for the 140's expiring on the 16th of feb I always like to look at the equity and etf call flow because it gives me a sense as to the sentiment underneath the surface when we're trading When you see really large amounts of volume in premium skewed to one side versus the other It has a reasonable correlation with how the day plays out So when you see a much more call heavy activity on the unusual side than Puts that can have an impact on the day being more likely to be constructive And even led by some of those same components that are having that unusual activity Speaking of which about 217 000 of call premium paid for meta expiring on the 16th of 405 strike So again, you know, some of these sort of Magnificent seven stocks getting a pretty strong amount of activity just out of the gate And in just about 20 minutes, we do get that jolt's data My stream ends around 10, but I gave you the playbook in terms of how I look at it 250k either way Is what makes it an interesting day. Okay, and I managed to make that rhyme. So that's fun, too But 250k above expectations You know, basically 9 million or more I think that's where you get risk off rates up And the other side, you know, if you get 8.5 or lower, I think you get rates down risk on, you know, a big bid And and that's how I would contextualize it. I think that Either way it could make for a more interesting day But if it comes right in line I'd just lean towards moderately bullish because you still have all that hedging and some of it might be taken off Which is liquidity positive Dan that's a great question. Thank you for asking it. How much and for those out there that didn't see it He asked how much does spx options impact es and it depends on the day Right, but often it's a pretty measurable impact for a number of reasons One of which is that if you look at spx as a contract It's trading between 1 and 1.2 trillion of notional every day And about half of that a little less maybe around 45 percent is expiring in six and a half hours or less And about 80 percent of it, you know, when we're including that Six and a half hours or less going out three days to expiration is is where that volume is being transacted So a lot more near-term opinion being expressed that not only suppresses a ball But it also has a bigger impact on price discovery that it used to Which is one of the reasons I built the tool that I did because we see zero DTE is Tend to have an outsize influence on es So, you know, I've built a number of tools to kind of map out the impact of of zero DTE is where price is Being transacted in spx, but also how that translates to es level since there's a delta between the two And I would say that you know on options heavy days where there isn't an outside catalyst It's extremely noticeable Some days it acts like a magnet pulling price right around like for example If you have a day where calls are much more bid than than puts and those calls are let's say 10 handles from current price and price is in uptrend Let's say breaking out of the opening range the 30 minute range the upsides you're in an uptrending day It's very likely you're going to hit that most active call on the nose But and you're going to get a heads up seeing that volume in advance So in my view On days where price discovery is driven more by options It's it's extremely important to watch on days where there's outside catalysts that have a bigger impact It's less important to watch. So for example, yesterday the treasury came out with this announcement that qra They would be lower than what they had projected lower than maybe what the market was anticipating Now, obviously they can upsize that later and they often do But that was taken as positive that came out around three and you got a really strong bid From that which exceeded where most of the options activity was happening Yesterday and that was an event driven catalyst, right? So that that went beyond what was sort of being priced in to those intraday dynamics So i'd say that on days that don't have that powerful event catalyst Options tend to be setting the tone in the market a lot of the options activity by default is Selling at the money or in the money puts to buy just out of the money calls And that's net constructive for liquidity. So knowing where that activity is happening where those Algorithms are placing their orders helps us to understand a lot more about what's happening in es because a lot of the volume footprint in es On some days as much as 60 or 70 percent is driven by market makers hedging their spx positioning So dan, let me know if that helps and and to contextualize kind of the impact here I've written some articles on it on traderade.com as well that are free to view That you're welcome to check out You're welcome Really good really good question So we're just sort of Flat here. I think the market is is kind of coiling up a little bit in anticipation of jolts These labor market numbers have been pretty important Um, so wouldn't be terribly surprised if we sort of chop sideways for a bit here until we get the data One thing that's important to realize too when when these data releases are happening Liquidity thins out just before during and for a little while after Which means it's harder to get good execution You can have wider slippage You can have more potential for being pushed out of things if your stops are tight So it's really important when we're coming up. Excuse me on these type types of events That we aren't in too much size And in some cases like for something like this I don't want to be in anything on a scalp level like if i'm if i'm intraday trading I don't need a position on before a binary event You know because that's tantamount to gambling. I don't have an edge I don't know exactly what jolts is going to be so i'm not coming into this knowing Oh, yeah, we're going to rip 20 points higher. So i'm long before jolts like I don't know Do you know do you know what the data is going to be? No, we don't but what we can do Is we can take positions off ahead of data like this We can examine the market impact of the data and see if that has a setup that comports to our system Is there a trade that comes out of this like do we break up and start to see more Offers coming above. Do we see more options activity pushing higher? Do we see more of an expression by market participants that they're looking for prices to go higher And a trend that matches that so the momentum is in our favor in that situation. I'm more than happy to get long But into the event I often don't see any real reason unless I feel like I have some some real edge And and even then i'm not going to go full size because what's the point? You know, this is the same thing that I see when folks are betting on earnings outcomes And i'm not talking about like, you know putting on something like, you know Selling the putter selling the call or buying the putter buying the call where you're you're just kind of You know talking about the vol outcome I'm talking about directional betting on earnings or other binary events It's it's generally just gambling. So it's not how I trade I to be consistent I've been doing this since 2005. So like 19 years now to be consistent I try to remove myself from those types of trades that feel more like gambling Because it doesn't matter if you're right or wrong. What matters is if you're making money And if you're understanding how you're making money You have to be able to repeat it Next day next week next month next year. This is a business Right, you have to understand how your business works So the idea is you're taking inventory if you're a long trader You're taking inventory that you think is discounted and you're selling it later at a premium Right Well, we don't know if we're going to be taking this inventory in at a discount selling it at a premium after jolts So that's why it's important to be just a little bit more nuanced about approaching these intraday trades too Let me know if that makes sense to folks out there if you have any thoughts or questions or experiences you want to share Feel free to chime in Danny asks how I can if I can go over how I view the liquidity differential and iceberg indicators on the chart Sure. Yeah, I'd be happy to do that so The liquidity differential is showing you where there is a differential between the bid and ask So that's important to contextualize because it's kind of showing you who's more dominant In the market at that moment in time Because what this is showing you is the bid and ask liquidity, right? So when liquidity differential is more negative It's showing you that there's more liquidity that's looking to get out, right? When it's positive it's showing you that there's more liquidity that's looking to get in It's a very short term indicator For me, I like to see it more at extremes when I'm looking for some kind of move that's reversing or like a breakout, right? So for example, if let's say after jolts comes out, it's like a really low number. Let's say it's 8.45 I'd love to see That liquidity differential going very very high like a thousand plus Showing like a lot of flow wants to get into this market and it's maybe becoming less price sensitive Right because the more that's banging on the door that's on one side of the trade The more likely it is that it's going to have to do what the market wants, right? If there's more supply of bids then supply of asks then the market's going to have to move higher to accommodate that So that's how I kind of look at the liquidity tracker I've got it on the sub chart on the white line and then on the radial And so you can see it in both places and then you can kind of correlate how it may impact price For icebergs though, this is both something you could see on chart. You see this 200 here, right? That was an iceberg sell of 200 lots And then the sub chart blue line is the icebergs, you know for me And you also have it on the radial here showing the icebergs over the last 30 minutes the the delta For me what I'm really looking for with icebergs and stops Is signs that someone's kind of getting pushed out and that we're seeing a change, right? So what I mean is stops are typically shorter term traders that are more price sensitive So when you see like price moving higher And you get a bunch of people that are being bystopped out And you've got icebergs starting to accumulate into that move that can be really interesting to me, right? That's starting to show you that in passive buyers are overwhelming the short term momentum traders And typically you can get some continuation into a move like that just like you can in the opposite Well, you get a lot of people that are getting blown out But now the icebergs are selling into that strength and saying, okay Well, you know, we kind of had our stop run now. It's time for us to distribute and look for another opportunity I think that both scenarios can be pretty interesting But I like to use icebergs with stops rather than outside of just having stops, right? Or just having icebergs. I think they work really well together That being said, you know, the icebergs are showing you sort of the larger hands in the market the passive flow And an iceberg if for folks out there that don't know an iceberg is a trade That's large enough that the player wants to hide the total size of their hand, right? So maybe someone wants to transact 2000 s and p contracts But they only want to show 100 at a time to not spook the other side of the market So that's what an iceberg is and that's why it's important to realize that these iceberg players are usually much larger passive flows Moving through the market. So let's say you have a day where icebergs are trading 2000 3000 4000 positive delta that's showing you that over that time frame Whatever you set it up in book map that there's a lot of accumulation That's generally constructive, right? There's you're showing there's short covering or or actual accumulation of exposure by larger players So that tends to be something that's constructive I like to see it especially in the first and last hour of the day because that's when those flows tend to be the more more intense So let me know if that helps Danny About eight minutes out from getting jolt's data here and also wrapping up this stream It's nine to ten every Tuesday So definitely check it out if you're interested in the work i'm doing at trader aid Which is all about helping traders become better sharing ideas and tools Check us out. We've got a 30 sale going on until tomorrow You can use the coupon two year sale number two year sale at checkout And you can also get up to 40 discount on book map Visiting trader a dot com slash book map. That's trader a dot com slash book map So we can see more liquidity Above us again. We talked about the importance of resting offers building in an upwardly trending day We do have that data print coming out in just about eight minutes I would imagine that liquidity thins out a bit ahead of that print So be careful if you're trading this market aggressively scalping it This this tends to get a little choppier And that's one of the things really cool about book map is you can see the presence of these different You know market participants and how they want to participate So that heat map is really really helpful particularly when you can contextualize it with a bigger picture Like where is the volume profile over the last three six twelve months? Where is the options positioning where options transacting all that tends to be quite helpful So look at this we can see now that our Options data is populating with the spx options visualizer We've got the hot call translated over here to es levels up top And that is in excess of the amount of puts that's we've got that asterisk there to show us that the put call ratio favors calls But also the hot call or the most active call is being traded more actively than the most active put We can also see the warm call. That's the second most active And the warm put and these numbers are updated every minute So this is pretty interesting because it can give you a better sense as to how people are participating and where positions Are in the options market And you add that nuance nuance to the liquidity visualization of book map and I feel like both together Can be pretty powerful What significance does the large order indicator have when in certain arrangements i.e. it looks like pyramids? so Big spark. I think you're asking about the icebergs. Are you talking about the Um The blue pyramids I'm going to assume that's the case. You can tell me if i'm wrong, but the the blue icons are icebergs if they are above Then that's showing you the size of the sail if they are below that's showing you the size of the bid In the columns. Oh, okay. So you're talking about like the cumulative order book and the session volume profile c o b and s v p So those We're going to talk about separately cumulative order book. This is where People want to transact and the size that they want to transact in The redder offers the greener bids. Okay, so like right above us. We've got this offer of 628 Contracts or as it was initially put on 671. You can see it in the heat map. It also translates to this column Then the session volume profile Is showing you where transacting has already happened So these can be areas that are important particularly as we go throughout the cash session Seeing where we're building acceptance where we may have Places that market participants are more interested in transacting Right. So that's resting liquidity when we're looking at the cumulative order book. That's all resting liquidity So these are large institutional players For the most part and this is their orders all aggregated So all this red here like that that area you mentioned This is someone who wants to sell here whether they're Closing out along or entering a short That's not clear to us But what we can see is there is that large offer there And so not only is it visible in the cumulative order book But it also comes out the heat map and you can see it You know in this in this expression of that outsized liquidity right above us as well So for me I look at any order of 250 or more contracts and es as being significant On days where the order book is as small as it is like it is right now Maybe even 200 or less because right now the order book's only 35 000 contracts As we're just three minutes out from jolts Let me know if that helps And so again, we are just Over two minutes out from jolts about two minutes 30 seconds The forecast is for 8.73 million My thought here is, you know, we get nine or more. That's negative for the market It's negative for stocks and bonds. We get 8.5 or less. That's positive for stocks and bonds That's kind of how i'm contextualizing it. It's a very simple way to trade it We are coming into this data pretty well hedged. We do have You know consumer confidence coming out at the same time I don't see that as being as important of a data print unless it's really meaningfully an outlier But the forecast is for one point. I'm sorry 114.2. The prior was 110 So that'd be a build on that confidence continuing to increase the market right now trading right at the midpoint The midpoint is an indicator that pops up automatically when the flows between the puts and calls are relatively equal And that's exactly where we are right now and price is sort of pinned there So this is another way that that spx options visualizer, which will be on the book map marketplace It should be this week can help you Have a better sense as to how options may be impacting the market Just got about a minute left if anyone has any questions or thoughts anything they want to share And it will be back next Tuesday at 9 a.m. Eastern Really appreciate everyone tuning in It's been fun to talk about All the stuff we've been talking about the technicals the convergences between options and volume and Sort of putting it all together and how we can trade off of it And you can see liquidity is sitting out ahead of the event You see how the heat map has gone lighter and lighter blue There's less liquidity here as we're getting into jolts. This is why it can be a little treacherous to trade this stuff So i'm going to hang on just for the data print and release and then i'll hop off just after 10 Got about 30 seconds left Data is coming out imminently Just waiting for it to cross my screen here. Obviously, there's a little delay for youtube as well Jolts came in at 9 million So we got that uh that stronger than expected print Consumer confidence just about in line with expectations, but jolts. That's the interesting one 9.03 million Versus an expectation of 8.73 million You can see on screen the initial reaction is a drawdown in s and p We also see rates moving higher bond futures moving lower pretty much exactly what we talked about Nasdaq also even more rate sensitive in the s and p grinding lower here You do see some liquidity also appearing below and for nasdaq that's decent size So the dynamics have now begun to favor sellers here This is not the type of data that folks would have wanted to see if they wanted to say we've got the all clear from the labor market This puts us at a ratio of about 1.5 jobs available for every unemployed and insured person seeking work And that is a tight labor market by any definition So that concludes my stream today. I really hope that was fun looking at the numbers looking at the data Modeling what the outcomes might be so far so good on that by the way I wish you all a great rest of your trading week and i'll see you next Tuesday 9 a.m eastern