TRUMP WANTS A GOVERNMENT SHUTDOWN - PART 2
But First, Let's Go Get ES 6127
Live trading room clients know I check this daily because this level has been the bullish upside price target since my April 23rd liquidity tell went positive.
And then, my conviction grew that we would see it by June OpEx or Qtr end when we had the May 12th gap up in markets on US-China Geneva trade talks.
Since that Birthday Rally, we spent a few weeks digesting that key 5928 level, but even with the Middle East war vibes, 6127 is still in view.
Mechanical Buyers
As Hans & I have covered a few times in recent weeks, and Jason volland-dealer-positioning has confirmed:
DEALERS have entered index short gamma land, meaning they become buyers of deltas should we squeeze a little more, adding to the "mechanical" upside chase.
Nomura's McElligott also sees an "UP, THEN DOWN" path:
"...if we continue this ~50bps daily change environment, there is beaucoup Equities to buy coming from Volatility Control in the ballpark btwn $62B at 1m to $177B at 2m..."
McElligott shows how large cap momentum helped drive the recovery off April lows, but small cap (short covering) has helped the rally broaden out.
Lastly, leveraged ETF flows (AUM) has ticked up rapidly... and rebalancing flow has followed. Hans really likes this indicator as discussed in our Macro-to-Micro Options Power Hour Wed.
Now let’s review my Big Macro Trend trades, Govt Shutdown risks, and my thesis for a Sector Swing Short (Banks). Also a bond trade that is up 10X this month.