 Happy CPI day to all those that celebrate this momentous occasion the most important day of our life Comes again, and we see a pretty positive reaction in the market post CPI We see S&P futures grinding up to the second key gamma level pre-market Let's take a look at some of the rates Not a huge reaction in twos here Initial reaction quite negative then a bounce and just sort of settling in a bit higher than where we started Tense pretty flat. So not a big reaction in rates. Let's see what the euros doing euro had a big drop Popped and now back to where we were before so it's really equities that are the most excited here Some of the other intermarket dynamics that you typically see play out that are supportive like dropping rates and a dropping dollar Not quite playing out so much pre-market. We'll see what happens during the cash session here Ordinarily with the print like that you would expect that rates would go up more the dollar would go up more We'd see equities under some pressure not quite seeing that now part of that may have to do with other Dynamics that play out in these situations one of which is you know, you see people hedge ahead of the event and Then they have you know the motivation to take those hedges off So that could be some removal of hedging that we're seeing here And we're still seeing Fed swaps pricing in that first rate cut by the Fed in June So unmoved by the CPI data so far We did see some increases in today's CPI reading in energy particularly gasoline and food oil as well as utility piped gas service We saw some relief and food away from home and services less energy including shelter and transport Just looking at month over month levels and how they trended last month versus list this month So it's a bit of a mixed bag. It does make sense to see energy coming back We have seen the price of oil on the rise over the course of February we've seen a bid in heating oil and of course gasoline tends to follow the price of Oil to some extent depends on refining capacity on the other side, you know food Away from home coming down a little bit makes sense as well So we'll have to parse this as the market opens. I think the initial Reaction here is more to do with removal of hedges and equities based on some of the intermarket dynamics. We're seeing Take a look at the Russell here similar look gap down and then just rocketed and now consolidating Gold gold actually had a nice little pop after the drop. It's starting to give some of that back here crude Not a huge reaction to the data overall, which makes sense We'll go back to the tenure rate We're looking at the futures there And we just see them settling now So there was there was certainly a drop implying that rates on the tenure were initially going higher and Now we've sort of settled so it's a basically a break even let's take a look at the euro the euro now coming back Down implying some upward pressure in the dollar The yen actually had a drop and then a pretty powerful pop it is also settling back down Let's look at some of the heavyweight stocks ahead of the open here Here's Nvidia Nvidia had a drop and pop and now it's rolling over a bit Similar look with SMCI and Meta Amazon still pretty strong here comparatively speaking had that drop but that pop hasn't stopped Similar look with Microsoft as well Apple Pop but drop so settling back down Similar look with Google Google looks like it's got some more room to the downside here Maybe 137 75 on that resting offer And here's Tesla Tesla is a bit of basket case this morning But we did see the drop and pop and now sort of the sideways Consolidation and finally we'll round it out with semis semis You just can't get it ahead of these things They're just grinding higher pre-market after that initial drop go back to the S&P 500 here OPEC crude oil output rose by 203,000 barrels per day to twenty six point five seven million in February led by Libya and Nigeria Despite fresh voluntary cuts, so that's interesting and certainly puts a little bit of pressure on the price of oil as you see more supply coming online Looking for red book data. That's retail sales data year over year collected by Johnson red book coming out in just about five minutes here We do see a little bit of a pullback after that initial positive reaction to CPI Which left some scratching their heads particularly as the intermarket dynamics to support that move just weren't there and Again, you know looking at the way this reaction played out to me initially it smells more like removal of hedging inequities You get folks and we saw it yesterday. There was a lot of out-of-the-money put buying in SPX There were some hedging flows and futures you see that ahead of large event volatility catalysts and Then when the catalyst happens and it's not worse than expected, you know today CPI was hot But it wasn't scorching you get folks that remove those same hedges and so you have an addition of liquidity into equities I feel like that's Largely what played out particularly given this pullback. We're getting from that initial reaction But we'll see let's see what the cash session brings us And we're seeing S&P just getting a little bit of support at that volume weighted average price level that's calculated from the overnight session We did see resistance around this gamma-2 level found by the advanced SPX options visualizer And that has to do with the second largest level of total Gamma exposure on the SPX options chain Let's take a look at the NASDAQ here NASDAQ similar look as the S&P it had that Pretty sizable pop after that gap down drop and you can say that's a gap down because look there wasn't a lot of Transacting in that gap down. So there really wasn't much liquidity there when you zoom out and it's probably better seen on the S&P When you zoom out, you see how there's like no liquidity here at all This often happens before an event volatility catalyst You get this just disappearance of everything in the order book now Obviously the goal of high-frequency trading the the reason we allow algos in the market was ostensibly to provide liquidity But they all disappear when you need them the most so you get these crazy moves and that's what that gap down was Right because there was really no liquidity until down there just above 51-77-50 and then you can see after the event liquidity starts to come back Bring us into the present or now it's starting to actually increase quite a bit as we get closer to the cash open This is one of the reasons it's important to be a bit careful Trading events because you get these kinds of reactions in a low liquidity environment, which can exacerbate the scale of the move Someone asks in the chat. What data points suggest that the Fed shouldn't cut in June? Well, I would say all-time highs in crypto near all-time highs in stocks near all-time highs in housing prices some signs of inflation Reaccelerating PPI coming in hotter last time. We'll see what it does this Thursday services and Manufacturing PMI prices paid in positive territory suggesting that there is more kind of inflation in the pipeline NFIB small business survey suggesting that they're going to be raising prices about 36% of respondents over The next three to six months that correlates pretty well with CPI with a bit of a delay so there's some you know, I Would say pipeline of potential positive inflation pressure The other one was you know average hourly earnings still remain higher than what the Fed would want to see Which does add some pressure as well. So I would say all in all If the Fed's dual mandate really is price stability and full employment Even though unemployment's ticked up to 3.9 percent. We're pretty darn close to full employment We've got like what 1.3 jobs available for every Unemployed and insured person seeking work. So still a somewhat tight labor market. So you could say the jobs market That part of the mandate full employment kind of kind of okay, and then on the other side price stability It's hard to argue. We really have price stability with some signs of inflation Reaccelerating so I'd say if the Fed really is honoring their dual mandate here. There's every reason not to cut Now there are other reasons that they would say that there is to cut and it's gonna have more to do with bank reserves and reverse repos Coming down and then wanting to add some liquidity into the short-term funding mechanisms of the market I think that's really where the rubber meets the road for the Fed I don't think it's gonna be them really looking at their dual mandate. I could be a little cynical on that I am a bit cynical of central banks folks that follow me know that but You know, I do think that there is Some Level of potential policy mistake playing out should they cut? I think that's one of the reasons that golden crypto have such a strong bid And I think it's one of the reasons that stocks have just kind of ignored all this assuming that the Fed's getting back into a cutting Cycle when none of the froth is really abated anywhere, you know We can see it again in crypto inequities in a lot of the meme stocks where call skew is absolutely blown out to the upside We can see it in real estate as well, particularly the higher-end housing that continues to grind up in price. So I Don't see a lot of powerful reasons for the Fed to cut here The economy is not in trouble. The financial system is not in trouble And if if inflation is starting to show some signs of it reacceleration Then, you know, real rates are coming down a bit Which means policy isn't that restrictive and then the last thing I'll add is if we look at various measures of financial conditions We can see that financial conditions have actually eased Since the Fed started hiking So there's been such an offset from fiscal and Other central banks like the Bank of Japan and to a lesser extent the People's Bank of China that financial conditions didn't even really tighten For more than maybe several months during 2022 particularly during the end of 2022 they got pretty tight But now they're looser than that where they were before the Fed started their tightening cycle So I'd say there's every reason to not necessarily lean into cuts But I think nevertheless the Fed likely will cut at least twice this year probably Or possibly up to three times. I don't think it'll be what the market expects, which is over three times But nevertheless, I do think they'll lean into that because they've already forecasted for it They've already, you know signaled with some degree of certainty now. We will get The Fed's summary of economic projections in their March meeting, which I think will be quite important. They'll give us their Thoughts on where economic growth is going inflation and then the dot plot which gives us a better sense as to what Policymaker expectations are for interest rate policy. We also might hear a little bit more about their plans for their balance sheet We've heard a number of different opinions on that such as where our RP goes that they start to slow down on quantitative tapering Tapering the tightening, I should say, right? The other side is they've talked a little bit about selling mortgage-back securities to actually Fund some of the short end buying so they would be actually shifting their maturities Powell's also talked about shifting maturities to shorter maturities on their balance sheet So I think all in all we'll probably hear a little bit more about their balance sheet and what they expect to have happen there That would be my thought for the March meeting and maybe that'll provide some more clarity as to what they're thinking about You know forthcoming cuts and why Specifically they're thinking about them Let me know if that helps with your question Good morning, everyone. I have not heard of Lux Algo Someone asks do we use Lux Algo? I've not heard of that. You're welcome to share more about it. Certainly piqued my interest and Yeah, so let's go back a little bit further in time here, right? Let's go back to where this all started. So we do see the markets here pre-market giving up some of that pop post CPI Just finding some support at VWAP here. We did see some resistance at what has now become gamma one on the advanced SPX options visualizer and Remember again when you have these events, you know, you see liquidity disappear There's no reason to be too aggressive ahead of CPI Because you can get these big gaps You can get a lot of chop and unless you know You have some kind of way of managing your risk, which would mean like trading very very small size This type of a move can be quite jarring Especially given that you're not going to get any fills as the event is happening that are going to be ideal So my thought on these types of things is to kind of let it settle out See how the market reacts and then look for your opportunity I felt like this was maybe a little bit of an overreaction and it had more to do with the removal of hedges And I feel like we're seeing that validated to some extent. So just to go over that again for folks out there just tuning in Before you get a big event volatility catalyst like CPI or the Fed or otherwise You're gonna have large institutions that will hedge their books into that event because they don't want to necessarily suffer Unmitigated downside risk. So they'll be buying puts in SPX They'll be shorting, you know, the S&P 500 futures or stocks or otherwise wherever their hedging mechanisms are preferred But most of it is gonna happen in SPX options and in ES futures. And so when the event happens And it's not the end of the world like yeah, it was a hot CPI, but wasn't scorching hot You can see this sort of violent move Because those hedges are being taken off rapidly usually even algos are involved with removing those hedges So they parse the data They have the parameters that the trading desk was looking at for CPI and they say, okay, wasn't as bad as it could have been Let's get out of those hedges and it kind of turns into yelling fire in a crowded theater Because then you got a bunch of different algos doing the same thing kind of modeling that we need to get out This wasn't a disaster That becomes liquidity positive you add a bunch of liquidity into the market you get a bid and then once that removal of hedging completes Well, you can kind of see what happens, right? You see a little bit of a rolling over So again, we haven't gotten to the cash open. It's too early for us to say what the actual reaction to CPI is here So we will be waiting and I do like that 20-minute opening range to get a better reaction Now we just got Johnson Red Book year-over-year about five minutes ago It came in at 3% versus last reading year-over-year was 3.1 percent So that just says 3.3 percent growth at a nominal level of consumer buying at retail stores year-over-year So overall good news now when you adjust that for inflation, it's yeah, kind of flat, right? The CPI just came in at Let's look at headline, right came in at 3.2 percent year-over-year if Johnson Red Book is 3% year-over-year Then in real terms, it's down two-tenths of a percent year-over-year, right? So consumers are spending more Excuse me, but they're getting in effect The same or less because of that compounding inflation effect That sounds pretty cool. Definitely feel free to share more about that Opening gate trader if you have some screenshots or otherwise and Folks one thing to be really aware of here because I see this happen too often and people Get in trouble. Don't assume that the reaction within like a minute to a data point is the reaction Right so when you get something as important as CPI or the Fed or big earnings or any kind of data print That's that's significant Especially when it's happening pre-market or after hours Do not assume that the initial reaction that you see is the reaction. It's like, oh it popped. It must be good news That's a little bit aggressive We need to wait for things to digest because it takes time Markets take time to process information. There's the bot reaction that we talked about Right But then there are also the actual humans that digest the data and make positioning decisions on the basis of it So when we're looking at it from that perspective, I think it's important to contextualize that That decision-making process does not happen in two minutes people don't parse all of CPI and they're like boom got it Know exactly what I'm gonna do The bots do that and they're often wrong Their human handle or sometimes have to go in and kind of adjust their positioning afterwards as well so my thought is Patience is a virtue Around event volatility catalysts There is no rush. You don't have to be in the CPI trade You can look for the trade that happens during the cash session afterwards Particularly when you get this kind of crazy volatility in and out of you know the CPI data release Plus as you get into the cast cash session, you're gonna see improved liquidity, which means less slippage better order fills, right? So it's a better. I imagine that today's trading session will be a little bit less volatile than 830 to 9 You know, we'll see but that was that was quite something there You know, you're pretty much traded a 40-point range in a matter of 15 minutes in the S&P So the lesson here is just with with trade setups, whether you're intraday or swing time frame Patience really does pay off over time There's no reason to try to get in every single trade particularly around events where they can be kind of binary and there's a lot of Room for volatility due to those lower liquidity conditions going into the event Now that CPI is behind us and we're getting closer to the cash session You can see on the heat map that liquidity is building Now let's zoom out a little bit and then we'll take a look around the market We do see a really large level of interest below us here This is that level where we actually saw a bounce earlier Post CPI just around 51 78 that was an area where there was a lot of hedging interest yesterday It was the second most active area of Put by So so far we are seeing sellers ahead of the open kind of reversing this initial pop that I attribute to algos Largely removing hedges The Nasdaq let's zoom out a little bit so we can contextualize this. It's also looking pretty Weak here now testing the point of control below view app the Russell Having another one of those days it looks the weakest of the bunch. It's actually almost back down to the CPI lows And then we've got gold gold continuing to slip and we're just going to zoom out and all these charts to the CPI reaction Just to kind of get a sense gold actually took out the CPI low. How about that? It's supposed to be a hedge against inflation inflation's heating up and gold is rolling over. I Just a little bit my opinion on gold is actually that it's a Uncertainty hedge Not an inflation hedge and if you really study how gold reacts It reacts better in times of fear than times of intense inflation overall otherwise gold should be substantially higher than where it is right now where it's what like $250 above where it was in 2011 and yet inflation is certainly Debased the dollar more than that would suggest Well, we are seeing yields building in the tens here. Look at this This is quite interesting. So pre CPI you had tens gap down, right? This is the futures contract. So inverse is yields So you had that big gap down pre CPI then you had a little pop off of that, right? Now we're going right back to that level. This is ominous for equities This suggests that Nasdaq stocks especially should see some weakness The euro which is the biggest part of the dollar index up. Look at that right back to the CPI lows It was a little early to celebrate that move in CPI. We do have a 10-year auction coming up today Results posting just after 1 p.m. That will be really important to get a sense as to where participants are Thinking about inflation after this reading. We'll take a look at some of these hot stocks ahead of the opening bell Here is Nvidia on screen rolling over from its highs not looking quite as bad as some of the other areas But still showing some weakness from its highs silicon I'm sorry super micro everything's about silicon these days super micro also rolling over a little bit though not back to its CPI Lows meta same look here pre-market Amazon we're gonna again zoom out a little bit rolling over a little bit not quite back to its CPI lows Microsoft showing some weakness similar look as the rest not quite back to its CPI lows, but rolling over Apple just the struggle is real with this one. It is below its CPI lows Google Yikes Google well below CPI lows just rolling over and now starting to stabilize a little bit and Our buddy Tesla above that key pivot of 177 77 testing it this morning and stabilizing post CPI here And we are back to the S&P Which again for now, we're just gonna keep those CPI lows on screen We know that they're here just around yesterday's warm put level and this 1,000 resting bid So remember when CPI came in the market did drop immediately I've got some folks in my YouTube discussing this and saying, you know, it should have come in If it was hot the market should have come down immediately. Well, did we got a gap down in everything Post CPI then you had that pop which again was probably the release of those hedges and now you're seeing the drop Come back in we're back to basically where we were prior to CPI in the equity indices and if we're looking at You know the 10 years we're actually testing those CPI lows similar with the euro So I would say that initial reaction is being faded That that initial recovery reaction I should say and we've got the opening bell coming up in just under 14 minutes here folks And you can see this point of control level here this yellow line This is the line in the sand We cross below that we are below where we were pre CPI and that's going to give sellers The chance to get a little bit more aggressive and it puts this 5178 level right on the radar. I would say yeah 5197 is the point of control right now So that is a level to watch as we get into the cash session Things could evolve quite quickly after the opening bell Because during that first hour of trading you have a lot more Institutional transacting and folks I want to just go out and say one thing that's really important This is options expiration and futures expiration week So that means you're gonna have a lot more rolling of positions by large players that are somewhat price agnostic now what that means is that Technicals and probabilistic outcomes from certain types of trade setups. They don't have the same weight They have less likelihood of manifesting as you would expect because you've got folks out there They're like look, I got a bit I got to move around like 20 billion of positioning doesn't matter what the price is doesn't matter What crayon line is they're on the chart, right? So that's the caveat I will say about op-ex week is that it does not play out as you might expect versus other weeks Because of all that position shifting that's happening. So let's take a look around some of the other markets here We've got just about 10 minutes before the opening bell Here's the NASDAQ we're gonna again zoom back out and look at that. We have been plunging back down to those CPI lows We haven't quite gotten all the way there yet, but the NASDAQ has given up that point of control that it was holding So that is a bearish look for our momentum leader We watch the NASDAQ closely because it tends to lead the market up and down Russell Boy not looking so great similar look as the NASDAQ now It's just both of them really sagging back down looking like they want to test those post CPI levels gold Gold took out the CPI lows and looks like it's rolling back over you do have a large resting offer at 21 174 worth watching it's acted as resistance so far Oil getting a nice little pop here Let's see where we are in relation to the CPI move just trying to recover in oil here It didn't have a big move post CPI, but then after that we saw this pull, right? We got down from 78 and change all the way down to 7735 now we're seeing about a 50 cent rally off those lows To your note futures, this one's a real important one to watch This is sort of a way of seeing in real-time market expectations of the Fed a Two-year note, you know, if you look at its yield versus Fed funds, it tends to be somewhat predictive as well So it's a great one to watch. You can also watch Fed funds futures not for Predictive value, but for understanding where market participants are thinking things are going to go very important distinction by the way But yeah, two-year note futures are rolling right back over to those post CPI lows This is another sort of ominous sign because you're seeing the market tell us in no uncertain terms. This data Compels us to bring rates higher risk lower I'm gonna imagine as we go on to the dollar chart and one more that it's also continuing to show strength versus zero But first we'll go to the tenure the tenure taking out Those CPI lows, so that's ominous as well. Okay, we we have we want to be objective about assessing the situation That initial reaction was likely hedges being removed now. We're seeing more of what I call the real reaction and Yeah, Euro Almost back to those lows versus the dollar that we saw right after CPI data was released The yen a little bit more stable comparatively speaking, but still pretty weak day You know we had that reaction that big draw in the end then we had the pop now. We're falling back down again So let's look at some of the stocks here ahead of the open again We're gonna zoom back to CPI and video showing some resilience, but microstructure is distributed You've got those lower highs and lower lows there We'll look at SMCI. We're gonna zoom that back out a little bit similar. Look is in video less liquid obviously You got some random spoof for 8k on the bid down there at 1100 And look we've got met us showing that same sort of distributive pattern not quite as Much transacting going on in this stock pre-market, but nevertheless it had that drop that pop and now we're rolling over Amazon pretty similar look again will zoom out and you can see there is that drop pop and roll over Microsoft a similar look here now getting closer to those post CPI lows and apple Apple's actually taken out those post CPI lows and bounced a little bit But overall looks kind of ugly pre-market and Google, you know This one had that drop popped and then rolled over to significant new lows It's still well above the 200-day moving average by about three bucks or so But this one's gonna be one to watch it had shown Relative strength over the last couple days of trading now. It's back to weakness and Tesla Tesla's just sort of stable here. It had the drop it had the pop and then the drop again now It's consolidating we're gonna go back over to the S&P as we are just about Six minutes away from the open here And folks while you're watching if you have any questions about anything you see on screen or what I'm discussing You're always welcome to ask It might take me a moment to get around to you because I've got about Four different places that I'm streaming to right now But nevertheless, I do want to make sure that I answer any questions and that you get some you know Some value some learning experience Out of this stream My goal is to help you learn more about how I trade but also how I think the markets work So you can get a better sense as to how you may incorporate that into your process And an important part of that this morning was talking about hedge hedging and removal of hedging and how that can give us Headfakes and we saw that play out Pretty clearly with the S&P and the Nasdaq and we saw it you know The intermarket dynamics not support the moves that we were seeing in the equity indices and then them start to fade So that's all important to understand in the context of you know, whatever time frame you're trading But particularly shorter time frames Just less than five minutes until the opening bell here Fitch had a headline coming out earlier saying US Bank liquidity likely to remain relatively stretched until there is some shift in the Fed's monetary policy and So the next major economic event scheduled today is the 10-year note auction Results posting just after 1 p.m. This afternoon and there was over a hundred billion of Treasury auctions this week yesterday's three-year auction went very well Today's 10-year auction is 39 billion on offer from the Treasury Tomorrow we have a 30-year auction with 22 billion on offer and results We'll also post after 1 p.m. For that auction I believe the 10-year will be pretty important today to get a sense as to whether this inflation picture Shifting a little bit has an impact on what we've seen is recently being robust demand for US treasuries Part of that robust demand likely has to do with the presumption that the Fed Will be going back to an easing position. So some of these higher interest rates are more attractive Got just less than two minutes ahead of the open Coco setting another all-time high so far today just cannot stop running eventually I feel like chocolate will be more valuable than gold if this keeps up. It's just absolutely remarkable Do yourself a favor pull up a monthly chart of cocoa that parabolic move is extraordinary There's nothing else in the commodity space that looks anything like it now Obviously, you can go into crypto and make analogs with Bitcoin, but that's a bit different Cocos driven by hedge funds piling into speculative long positions combined with Real-world scarcity factors from unpredictable weather conditions damaging overall harvests So this has led to a mania in the commodity Someone asks what's my view on gold and silver now? It's a great question So I am constructive on precious metals But my view is that I would be a little bit more constructive on silver and some of the better-run gold miners I'm looking for them to catch up to gold and I'm sensitive to rates in the dollar if rates start to move higher If the dollar starts to move higher I think that could put some precious on up some pressure on precious metals and possibly alter my view there But as long as we see, you know rates and the dollar either moving sideways or ideally lower I think the whole precious metal space does have some room There's also again gold silver hedges against uncertainty, you know things that are bought in a more An environment where there is some modicum of fear I don't think that fear is coming in from the markets so much as the fear of a Fed policy mistake And the fear of geopolitical tensions escalating so with that backdrop that could continue to provide a bit of a bid for precious metals as well Let me know if that helps In terms of someone asked me is natural gas, is it time for natural gas soon? I think that's a great question So if we look at it from the perspective of seasonality Natural gas tends to do well in April So I'd say a little more patience But we are getting close to a time where there could be opportunities Now personally I prefer to trade the companies in the space like a diamondback symbol thing Versus the commodity itself But nevertheless April is more constructive for seasonality and natural gas Than march or february or january the opening bell has rung We are seeing a little bit of a bid off the open here. Remember as we are in op-ex week. You do have some of those decay flows right Theta decay is driving down the value of spx puts So in that first hour of trading you get a little bit of a bid All else being equal with those flows coming through on the other side of it However, there are reasons for folks to potentially want to sell into this equity market So going to be a bit of a tug of war here We'll see how it goes. I like to look at the 20 minute opening range The big caveat again is this is op-ex week So a lot of price agnostic players moving big positions around Meaning those statistical probabilities of the outcomes that we may be used to are subdued And we're going to take a look around other parts of the market here in just a moment to get a sense as to how this opening is shaping up And then within about the first 10 or 15 minutes We'll also get a better idea of where options interest is In spx and that can help to shape part of the trading day as we get a better idea of where institutional interest is in price And how much of a range there is So far we can see buyers pulling up the point of control into that cash open And we do see some liquidity beginning to build above at 52 20 That's just above that key gamma 2 level Now again a quick review of cpi month over month. There was an increase in energy prices despite them dropping year over year We did see a drop in food away from home And it was overall a mixed picture. So I'm going to go right back into it here Shelter and transportation their rises also eased a bit month over month now that may be to some degree ephemeral Transportation costs are you know, they're sensitive to energy energy going up There might be a bit of a latency, but those transportation costs could come back up. We also see shelter Slowing month over month, but home prices particularly middle and most especially higher end home prices continue to rise Which could put some delayed pressure on uner's equivalent rent surveys with about a five to six month lag And there was a small buy side imbalance going into today's trading session about 33 million on the buy side I don't really look at these Opening and closing imbalances with too much Interest all I know is that other folks do look at them and so they can sort of kind of maybe matter All right, so let's hop around we do see again that tug-of-war idea I was talking about between buyers and sellers on the open here. You've got those passive flows accumulating back s and p futures contracts as hedges are being Uh losing value, but some hedges are also being removed But on the other side of that you do have real sellers looking at that cpi acceleration and saying gee That's not what we wanted to see. So a bit of a tug-of-war. Let's look at the nasdaq here nasdaq looking worse than the s and p overall and Really starting to have a look like it wants to come back to these post cpi data release lows that gap down level. So we'll be taking a look at that that's going to be just around 18 212 on the nasdaq front month. That's june now rolled over everything over to june for equities Russell also has that similar look. It is really just weakening into the opening here Gold also rolling over a little bit into the open on that hotter inflation data again gold not really an inflation hedge more of an uncertainty hedge And crude oil rolling over as the point of control was pulled lower by sellers We got a little bit of a pop there into view app and now rejecting and we have a large area of Resting liquidity on the bid around 77 25 We've got tens here. They're also weakening that implies rates on the long end are starting to move higher And that makes more sense with the type of cpi print that we had Then it to to see rates actually show relief, which was the very initial reaction, right within that first 15 minutes You had a violent gap down and then a pretty decent recovery sort of like a beach ball being pushed under water And then popping but now we saw that pressure released and we're starting to see the real reaction and the real reaction Is this data wasn't so great? 10 year has a similar look albeit pushing below The post cpi data release lows and you can see it in the tens too all that liquidity vanished So really no matter what you're trading if it has some proximal relationship to cpi It sees liquidity disappear Right, so during that trading event. It's important to be very careful. This is why trading the event If one is going to do it at all should be done in very small size With wider stops because of exactly this type of price action Euro on screen back to cpi lows and playing the dollar is firming up here We'll take a look at the yen as well same look not quite back to cpi lows, but weakening nevertheless now Let's take a look at everyone's favorite stocks Nvidia yikes that open nasty business there Not quite gapping down to post cpi lows, but that was quite a drop there just right off the open about seven bucks SMCI even nastier there Not quite back to the cpi lows, but a big drop in SMCI Meta big drop in that one on the open as well And it is back to the cpi lows actually starting to take those out. Meta was a leader So seeing it behave this way is slightly concerning Amazon let's zoom out a little bit here Close to those cpi lows with liquidity building around that same area And microsoft actually ignoring the rest of the pack look at microsoft's relative strength. That is very interesting Maybe there's a specific news catalyst here Maybe not but folks are taking advantage of microsoft's dip and actually buying it and it is ignoring its peers apple yikes oof apple handily taking out those post cpi lows liquidity building below And uh really just this thing is just slipping after the market opened Google look google had that huge drop it extended the post cpi drop took that out now we've gotten right back up here Very interesting price action in google and microsoft today And tesla well tesla's dropping further it had that period of consolidation It was making up its mind about the next move and we can see it's decided now It's well below that pivot of 177 77 That's the line in the sand where I would get bullish above bearish below Bearish of tesla based on the technical listen look at all that liquidity building below as well Obviously people want to buy it, but they want to buy it at lower prices And s and p here look in week We are close to those cpi lows and getting closer to that level potential support We've got about a thousand on the bid at 51 78 just around where there was a lot of interest in spx puts Yesterday as a part of those hedging flows And folks if you're enjoying the stream feel free to retweet it It's just on the top of my twitter feed here or you can share the youtube link You're watching on whatever social venues that you're participating on the more the merrier Yeah, you're welcome. Thanks for tuning in appreciate the positive words I always enjoy watching the markets I felt like the reaction today post cpi was a little bit silly That's why I wanted to hop on mic a little earlier than I usually do for today's stream To just provide my two cents that this isn't exactly what it appears to be And indeed we are seeing that play out. I mean that was hotter than expected data And when the market reacts, you know, it doesn't necessarily have a reaction function That can give us an accurate sense as to what it thinks within two minutes or five minutes of the data release So that's why I like to caution getting too excited about those very quick snap reactions because it can be the removal of hedging More than a sincere view being expressed And I think today is a perfect example of that phenomenon People hedged into cpi when it wasn't an end of the world print They got rid of those hedges probably algorithmically those algos fought each other a little bit caused that big bit off the lows But the reality is it wasn't great data and there's every reason for real humans To sell into that a bit We've got about seven minutes left till we'll be forming that 20 minute opening range in s&p and naztac here We have seen some iceberg distribution here too Overall though, I I do get the sense that this is not a particularly happy market It probably has room lower from here We see that also in these intermarket dynamics the tens Easily below that post cpi low the two's getting closer to it And then of course we have the euro over here also Taking out that post cpi low Those are all dynamics that suggest there could be some more downside inequities as well Someone asked do I record the stream in order for it to be watched later? Yeah, so it is automatically recorded you can watch it on youtube on book maps youtube my youtube and on my twitter I think the youtube ones will be around like indefinitely And I think twitter purges their video recordings after like 30 days or so if i'm not mistaken So probably best to check it out on my youtube under the live streams or under book maps youtube under the live streams archive And if you find this, you know valuable for later learning, that's awesome. That's what i'm all about You know, I hope folks find value to watch it once maybe watch it again later or at least You know to kind of take some notes as to what all is being shared I've been trading since 2005 And I try my best with everything that i'm doing to help you Avoid some of the pitfalls that myself and other earlier traders make that's a big part of why I do what I do To share that knowledge and to help folks avoid some of that pain as well Which is one of the reasons I talked about head fakes this morning because I've seen a lot of people get trapped in that type of Trade and get their head ripped off getting too bullish on a reading like today And then it just goes absolutely the other way And you can see those large bubbles here if you're looking at the book map Heat map here those are delta prints that's showing you that there is aggressive selling Just like the large green bubbles are showing you there's aggressive buying you can see overall this tape has been full of aggressive sellers They are dominating the tape so far. So just to give you an idea of the mood People want to take profits here This is mostly a long only world like even the most aggressive bears out there are still net long There's very few people that all across all their equity exposure Retirement accounts taxable accounts trading accounts, whatever that are net short Right, so most of the action that you see on a day like today. There's weakness is more profit taking It's not just people leaning into shorts And most of the shorting that you see by institutions is actually hedging their book Right So just important context because I know there's this idea that like bears are just always short and they just Always are imploding when the market goes up. The reality is that some of the most ardent bears out there are net long Very net long But they're hedging that long exposure by shorting other areas of the market Just thought that was something to talk about As we wait for this market to kind of give us our 20 minute opening range Just about four minutes away from that We can see we're getting closer and closer to that post cpi low in the es contract for june And looking all but inevitable that that resting bid at 51 78 gets taken out by sellers here who are still mounting a rather aggressive pull Let's take a look around the market. See what else is going on here. Nasdaq below The cpi lows. It is our momentum leader that portends to the s and p following Russell similar look but finding just a modicum of support there so far Gold consolidating after making a new low Crude trying to make a push higher here Two-year note features continuing to grind lower 10-year note futures very similar look a micro structured downtrend of lower highs and lower lows And the euro same look there no big surprise The dollar is strengthening after yields are rising on the back of that print Nvidia continuing to fall nasty pull in this one now down $15 from the cash open it showed some strength into that cash open Giving that all up now And we do see resting liquidity building below in invidia this stock has incredibly stretched skew towards the call side So if we look at invidia's skew You can look at various websites to do this like market chameleon You can see that it is so thoroughly inverted towards calls that you get passive distribution It's the opposite of what we talked about with spx puts right If market makers are selling spx puts as those puts lose value from theta decay and otherwise They're able to reduce their hedges by buying back futures Well in stocks if i'm selling contracts as a market maker to someone that's buying calls on invidia And those calls are losing value due to theta decay and the price dropping guess what I get to sell shares into that I get to reduce my hedges and on opx week that activity intensifies and we're certainly seeing some of that Which means the offsetting flows the buying of shares and calls need to more than offset that weakness and so far they're not Long-winded way of saying invidia could have a little bit more downside from here smci taking out 1100 to the downside And we can see that's right close to those post cpi lows meta Trying to stabilize a bit, but you know it did take out its post cpi lows earlier Pretty volatile trade in meta so far Amazon looking pretty nasty. Let's see where it is in relation. Yeah, it's it's taken out those lows are very very close to it And microsoft we talked about the strength earlier. It is giving that strength up right now so it had that sort of Counter nasdaq bid the nasdaq was rolling over microsoft was rallying And now we're starting to see microsoft give that up a bit here, but it's still relatively stronger than its peers And apple just can't get out of its own way Big resting bid at 171 seems like destiny there And potentially even 170 Lots of resting liquidity below wanting this stock lower There is of course a fair amount above but the trend is your friend and these act more magnetic When they are on that path that the trend is following Google showed some strength up to 139 Rejected there it did take out that resting offer But then it came right back on the tape and we can see that stock rolling over like microsoft It showed some initial strength It's not able to hold on to it And then there's tesla here, which is just absolutely rolling over from the open. It looks a bit like nvidia. So we're going to go back all the way to the s and p futures here And uh, we are just above That level Of the cpi post cpi lows We do see a lot of call buying in tesla this morning As well as nvidia So we've got tesla 170 sweeps for june 21st 121 000 in premium paid Got 175 for March 15th 142 000 premium paid for those Got 177 fifties for this friday as well 311 000 in premium paid And then nvidia a thousand strike for this friday 143 000 in premium paid And a 1080 strike for may 17 318 000 in premium paid So a lot of activity in nvidia going out to this friday again 895 call strike 1.15 million in premium paid And nvidia options just lighting up the tape again today I mean i could go over all of them But we're talking about millions and millions of premium paid for that and for sm ci So a familiar theme Semiconductor calls are all the rage even though we're starting to see a lot of weakness here I'd imagine it'd be even weaker if there wasn't that kind of bid in the semiconductor calls Meanwhile seeing s and p bid off of that 51 78 levels so far and right into the midpoint we do see our initial calls and put flows So we're going to zoom out so we can see what the spx options visualizer is seeing today on the tape We can see that hot put building much lower from here around 51 26 on es the warm put around 51 63 now moving lower Now moving lower. We're seeing those flows build into that hot put too That is the most active option on the chain and the put call ratio Favors puts as of this moment across the entire chain. That is why there's that asterisk by the 3k So that just suggests that there is a renewed interest input exposure for the purposes of hedging and probably to some degree downside Speculation, but on the other side of it when we're looking at unusual options flows There's about 80 more going into unusual sized call buying and sweeps in single stocks and ETFs that inputs so far Yeah, you're very welcome. Thank you so much for the positive feedback really appreciate that and glad to hear that My explanation about removal of hedging helped to contextualize some of what we were seeing this morning T triple Q calls coming through about 500 000 in premium paid for the april 1970 strike That's the triple leveraged nasdaq ETF And interest growing in baydu june 21st 125 strike calls 183 000 in premium paid there Let's take a look at our friend the nasdaq Getting a bit of a pop off its lows Climbing back above that post cpi gap down so far with a decent amount of volume We see cvd or cumulative volume delta starting to tick back into the positive over the last half hour of trading Take a look at the russell Kind of a similar look as the nasdaq here And also cvd creeping back into positive territory Gold just consolidating here after those earlier losses again really large resting offer at 21 74 This is not a particularly liquid contract. So when you see that much on offer It definitely catches my attention and we can see it acted as resistance not once but twice So a little bit too much supply For buyers to feel comfortable pushing through crude climbing back up here above the point of control and just testing vwap from below You can see cumulative volume delta pushing back into positive territory over the last let's call it 40 minutes or so starting to look more bullish And we do see a really large resting offer and crude above us at 79 Tues starting to stabilize after that draw. So we're starting to see rates stabilize a bit higher than they were before cpi Similar look with those tens Still below that cpi low And similar look with the euro stabilizing a bit above that cpi low not by much but again suggesting the dollar shows some strength here post cpi Nvidia getting a little bit of a bid after that violent drop Still looking like a microstructure downtrend with lower highs and lower lows unless we start to see a push above 878 SM ci looking a little more constructive than Nvidia looking like it's trying to base maybe reverse here But seeing some resistance at vwap And meta actually nice reversal here a w shape bottom now pushing above vwap And amazon comparatively weaker than its peers, but starting to show a little bit of strength not a ton of conviction in that trading microsoft pulling back up And apple just sort of moving sideways here not a lot of excitement in this stock Google looking a lot like microsoft trying to get right back up to this area of resistance for google That's going to be around 139 where there's that very large resting offer And tesla looks like it's trying to put in a bit of a bottom here We'll give it a little bit more time to bake I'm going to say it needs to push above 174 175 to really convince the market of that And let's take a look at smh smh nice reversal on this one right back above vwap here as well So if we're contextualizing that opening range in the s and p We can say that the bottom of the opening range is going to be around this same level or there's that large resting bid Top of the opening range is going to be around 52 21 So we're still waiting for a move outside of that range. We haven't quite had it yet So we haven't really had anything that gives us a sense as to what kind of trend we may experience and again Big caveat big disclaimer. It is op x week. So these opening range probability probabilistic outcomes Are a little bit subdued. They're less likely to be as predictive as they would be under normal trading conditions on a non op x week Someone's getting bullish of rustle about 455 000 in premium paid for june 21st 215 calls pin duo duo 140 calls for May 17th 100 2000 in premium paid for that one a lot of excitement around their timu platform And pretty decent range today of pretty much a 40 point range So if we do get a break one way or the other we could see some momentum continue into that capital one financial 140 calls for this friday 250 000 in premium paid Reddit looking for a valuation of about 6.4 billion on its ipo Some saying the valuation is too cheap others arguing it's too expensive for a company that is yet to find a way to make profits An inverted yield curve is no longer a reliable indicator for a recession according to 22 of 34 strategists polled Do you see the s and p futures just pinging up back to this point of control? We see the midpoint coming back on screen indicating There's a relative balance between puts and calls here, which we can see While there is a little more heaviness to the put side of the equation It's not enough to say that this is a market. That's out of balance that it's an auction with You know that much more demand for puts So that's why the midpoint is coming on screen from that spx options visualizer that i've built for bookmap Which does align right here with vwap often there is convergence That we see that's one of the key themes that i like to talk about And so this is telling us it's a market that's in relative balance right now after that initial sell Let's take a look at the nasdaq and see how it's faring Very similar look in the nasdaq as the s and p. We also see there is a resting offer building above at 18400 Now is that climbing above vwap and now challenging the point of control? Russell very similar look here although seeing some selling pressure around that convergence And gold starting to get a little pep back here Still watching that really large area of resting liquidity at 2174 that has been resistance twice now Will the third time be the charm if we get there? I think it probably will be 79 on crude that area of interest continuing to look attractive Let's just zoom out a little bit more. Yeah, that's really the largest amount of liquidity on The book where the trend is heading so I think that's important to watch that level that 79 Again, we're watching west texas intermediate crude that that contract in cl Two's starting to look like they're consolidating possibly looking like they want to maybe make a little bit of a push higher here Similar look in tens, but overall, you know, these gave back their post cpi gains Euro a little bit of a pop but now starting to look a bit saggy here again This is about 70% of us dollar index waiting. So it tends to matter quite a bit And in video, you know really recovering very well a lot of those options flows that we've seen coming through Helping to provide some support options really are the tail that wags the dog in this market There's so much more volume and notional traded in single stock options And index options then their respective underlying in stocks and futures So, you know, if you compare say the s and p 500 index options trade alone It's 1.2 trillion of notional trading every day all of equity futures put together is 400 billion So a lot more interest in options. It makes sense also from the context of margin rates going up So if you want to get a better price on leverage options make sense to express that view Let's look at smci. Boy, you wouldn't even know there was a drop if you blinked It's come right back right back to where those prior levels were and smci and video options have been Absolutely hot all morning long. So not a huge surprise seeing these recover meta also recovering Nice w just pushed right through all those areas of resistance right back to that point of control Amazon similar look as well really nice v-shaped bottom recovery on that one unusual to see nevertheless there it is And microsoft climbing to new highs and taking out that large area of resting equity above at 410 apple just kind of Ignoring its peers looking a little bit more constructive, but Very very lackluster in comparison and google no longer showing that same relative strength that microsoft was But nevertheless still looks better than its peers overall But the comparison between google and microsoft Well, you can see which one's really getting the attention of buyers today And finally tesla ignoring the rest of the pack and heading lower really looking like it wants 172 potentially lower than that The company continuing to struggle with narrowing margins slowdown in sales sabotage of its gigafactory in berlin And you know increasing competition from companies like byd So tesla no longer a retail favorite Really invidia has become the retail favorite So i was hoping that we would see an opening range break one way or the other while on stream. We're really not Seeing that We have a really big range here. We can see it on screen So top of the range. Let's just call it 52 10 bottom of the range about 51 78 We're really looking for a decisive move one way or the other To qualify some kind of trend if we don't get that we just may have just sort of a choppy trading day Which would make a lot of sense for op-ex week Let's take a look at the nasdaq see if it's giving us any Interesting signs or signals here Similar with the s and p large opening range no real break one way or the other Yet although we do see cvd continuing to build showing there is more buying interest in the nasdaq Russell comparatively looks not great It seems like it wants to roll over here a bit Also another one where we haven't seen an opening range break one way or the other Going into rates We could see just some modest recovery in tens and the euro You know similar just a slightly modest recovery off of its lows So there's intra market dynamic still providing some weight For equities overall Nvidia 200 000 and premium paid for the 900 strike for may 17th. So still a lot of interest in those nvidia options here smci 108 000 paid for this fridays 11 50s so absolutely Interesting day. Maybe we're going to see the s and p start to pierce the top of this range here Let's keep an eye at 52 10 see if we can build acceptance above that level and make a push That would be certainly surprising with the intra market dynamics. We're seeing suggesting downside being more likely but nevertheless This is the market we're in So i want to thank everyone for tuning into my stream I'm going to go ahead and wrap it up here You can always watch a replay of it later on youtube or twitter And i want to thank book map for hosting me on their platform for this as well If you want to learn more about book map check out trader a dot com slash book map scroll down to the specials You can get up to 40 off. You can also check out my plug-in the spx options visualizer at trader a dot com slash spx That's trader a dot com slash spx And if you'd like to learn more about trader aid visit us at trader a dot com You get up to 20 off your first month or quarter with the code mayhem 20 at checkout. Thanks again everyone for tuning in I'll be back next tuesday at 9 a.m To stream more on book map