Posts tagged as Options

Wednesday Color - Small-cap outflows, financial & energy breadth, natty drop, energy options

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Monday Color - Breadth whipsaws, small traders, surprise spread, bond sentiment

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Thursday Color - Depressed investors, negative gamma, Anti-Zweig thrust, signs of anxiety

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Gold hasn't done this for a decade

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Heavy hedgingThe smallest of options traders continue to protect themselves against a market decline to an unusually heavy degree. Last week, they spent ...

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Monday Color - Small traders, dollar sellers, S&P momentum, quarterly run, energy bonds

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Small options traders bought this much protection only 3 times in 20 years

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.Small traders being testedThe smallest of options traders keep buying a large amount of put options. Over the past 6 weeks, they’ve spent more than 24% of ...

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Monday color - Nifty rebound, a rocky week, small traders

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Tuesday Color - Post-Holiday Blah, September After Volatile August, Put Premiums And Climaxes, Mexico

Traders start to return from the summer with losses in stocks and scary headlines the world over. This kind of activity has preceded mixed outcomes, and that's becoming a them in the shorter-term, without a clear bias.As Troy noted in an excellent recap over the weekend, the medium-term of ... [...]

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Sectors In Sync Makes Investors Crabby

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.All up or all downHalf of the days so far this month have seen every major S&P 500 sector move up or down together. This makes it one of the most "all ... [...]

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1 Of The Whippiest, Most Uncertain Months In A Decade

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.A whippy monthOn an average day over the past month the S&P 500 has moved 1%, one of its widest ranges since the financial crisis.When coming soon after a new ... [...]

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Monday Color - A Month Of Swings, Economic Uncertainty, Sectors, Scramble For Protection

Here's what's piquing my interest as stocks swing wildly from their weekend lows.Quite A MonthWe seem to be on track for another whipsaw, as markets try to recover from conflicting messages over the weekend, following a rocky end to the week.Price patterns probably mean less now than they ever ... [...]

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Friday Color - Risk Off, Options Anxiety, Many Lows, Big MOVE, Sector Extremes

Here's what's piquing my interest as bulls try to enjoy a summer Friday.AnxiousSigns of nervousness are everywhere. Over the past couple of days, we've seen a spike in pessimistic extremes, so there's no shortage of examples. Troy pointed out several aggregate sentiment gauges (Dumb Money, CNN ... [...]

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What I'm looking at - Liquidity Premium, Bullish Percent Index, Down Volume, Equity Put/Call, Value Line Geometric Index

Hi everyone, it’s Troy. The market has been in a downtrend recently. This is my first post, so let’s dive straight into it.SPY Liquidity PremiumAs the stock market remains in a downtrend, market participants are favoring securities with more liquidity. Index ETFs such as SPY are generally deemed ... [...]

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Wednesday Color - Curve, Fund Managers, Gold & Yen, 1% Moves, Skew

Here's what's piquing my interest as we go through yet another volatile session.CurvyMight as well get to it, since it's going to be a popular topic today. Another part of the Treasury yield curve inverted (or threatening to do so depending on the data source). The one that matters the most ... [...]

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Monday Color - 8 Straight 1%-ers, Large Calls, Corrections, Gold Buyers, Emerging Momentum

Here's what's piquing my interest on another tough start to a week.Lots Of WigglesThe Financial Times notes that this has been a particularly jarring time for traders, with now 8 straight sessions undergoing at least a 1% intraday change in the S&P 500. Historically, this is a long streak but ... [...]

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Wednesday Color - Bulls Gone, Put Volume, Energy Drop, Asian Axiety

Here's what's piquing my interest on another volatile morning.Buy The DipIt's still awfully early, but SPY is on track to recover at least 1.25% from its intraday low on back-to-back sessions, after having dropped to at least a one-month low.Since the end of the financial crisis, that has ... [...]

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Monday Color - Gaps, Volatility Jump, Options Buying, Warning Cluster, Hong Kong

Here's what's piquing my interest as traders gear up for a bout of Monday morning volatility.SplatTraders get to start the new week staring at large losses in the futures. That follows a week that was pretty much straight down, with the S&P 500 losing ground for the past 5 sessions.We haven't ... [...]

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Wednesday Color - ETF Asset Drop, P/C Ratio, Fidelity Sectors, Warning Signs, Bond Bulls, Debt Contraction, Mexico

Here's what's piquing my interest so far today.Leaking AssetsThe major indexes (excepting the Russell 2000) have risen toward fresh highs over the past week, but ETF traders don't seem to care. Assets in SPY, DIA, and QQQ have all declined over the past 5 sessions.Shares outstanding in all 3 ... [...]

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Tuesday Color - Gold vs Yen, Russell Lag, S&P Divergence, Mexican Breadth, Smart Money Selling

Here's what's piquing my interest so far on another day that's finding buyers not sticking around.Gold HedgeBloomberg notes that per Goldman Sachs, investors may be better off hedging against uncertainty with the yen than with gold. That's based on how pricey each of them are according to the ... [...]

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Bullish Options Traders, Buying Climaxes, Silver Flow, Hedgers' Bets, Breadth

I won't be publishing a Daily Report this afternoon, so this post is being sent as a Bulletin to all users. This is similar to what is included in the premium notes published most days.Bully BullyEven after a choppy week, the smallest of options traders have sustained their belief in a continued ... [...]

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Wednesday Color - Dow Stocks, Dumb Money, Gamma, Microsoft Expectations, Germany

Here's what's piquing my interest as some of the negatives that have piled up start to take some effect.Sector BreadthIndustrial stocks have been chugging higher, and it has been enough that nearly every Dow Industrial stock is trading above their 50-day moving average. This is the best out of ... [...]

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New Highs Ahead? Leveraged Bets Are Counting On It

Funds buy inWe saw last month that equity hedge funds apparently have a low exposure to stocks on a longer time frame. We also follow macro and commodity-trading funds, which tend to be more aggressive, leveraged, and trend-following with a shorter time frame. And they have suddenly seen the ... [...]

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Small Options Traders Buy Calls

Small options traders are now scrambling to make up for their May/June panic and have suddenly turned to speculative call options.They bought more than 4.4 million of them last week, the most since May and the 12th-most in any week since 2000. It amounted to 40% of their total options volume, ... [...]

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Monday Color - Discretionary Streak, Fund Exposure, Small Trader Enthusiasm, Earnings Season

Here's what's piquing my interest on a slow that, with some hints that buyers have reached exhaustion.On A RollThe WSJ notes that the consumer discretionary sector has risen for 12 straight days, one of its longest streaks ever. Indeed.Momentum doesn't die easily, and that was the case after ... [...]

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Monday Color - Short-Term Optimism, Funds Vs Options, Lagging Small Caps And Surprises, Bulls Return, Bonds

Here's what's piquing my interest as markets suffer their usual post-holiday slide.Short-Term ExtremesWhile stocks didn't surge last week, they did hold their gains. And whoever was still trading over a holiday week was pretty optimistic it was going to continue.The shortest-term indicators we ... [...]

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Tuesday Color - Fund Manager Panic, New Model, OEX, UAE, Miners

Here's what's piquing my interest as stocks jump on the latest hopeful headlines.Fund Manager PanicWe've already seen evidence that individuals have reached near-panic conditions over the past few weeks. They took out a massive number of hedges, they've said they're near a record level of ... [...]

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Monday Color - Tiny Range, Options Traders, A Split S&P, Empire Fail

Here's what's piquing my interest on what's likely to be several waiting-for-the-Fed days.No CommitmentThe WSJ notes that stocks have been stuck for the past week. The S&P 500 hasn't had a daily up or down move of more than 0.5% for what would be the 6th straight day, if today's meandering ... [...]

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Small Traders Buy Record Hedges Even As Financials Surge

Financial recoveryFor the first time since early 2018, more than a quarter of financial stocks within the S&P 500 hit a 52-week high.This kind of a surge has been good for the sector, with gains over the next year every time.In 2000, this jump in new highs among financial stocks led to a 4% ... [...]

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Monday Color - New Highs, Material Gain, Financials, Gold, Small Traders, 5 Straight

Here's what's piquing my interest so far today.High-LightOne of the most notable developments of the rally to end last week was the expanding number of securities that erased their May pullbacks. Nearly 10% of issues on the NYSE reached a 52-week high on Friday, the most since January ... [...]

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From Risk-On To Risk-Off In Near-Record Time

Risk-on to risk-off in a monthIn April, investors were showing extreme risk-on behavior, according to their eagerness to buy some markets over others. Barely a month later, that has cycled to extreme risk-off behavior.The first risk-off reading following risk-on behavior has usually led to a ... [...]

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Put Premiums Exceed Calls

Last week, options traders spent $2.1 billion on call premiums. They’ve become increasingly concerned about a further decline and spent more than $2.2 billion on protective put options. This is only the 2nd week since December that their put premiums were larger than call premiums.The table on ... [...]

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Monday Color - Cycle Peak, De-Risking, Silver, Breadth Extremes

Here's what's piquing my interest on another day failing to hold a rally.Mixed MessagesDepending on the data set, or even on the day, the fundamental picture for markets looks just as muddled as the technical one. One of the biggest worries is that the economy may be tipping into recession, ... [...]

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Thursday Color - Junk Flow, Stocks vs Bonds, Anxiety Alerts, Sector Breadth

Here's what's piquing my interest on a lackluster rally attempt day.Fleeing JunkInvestors have pulled more than $1.7 billion from the two primary high-yield (junk) bond funds, HYG and JNK, over the past two sessions. That's tied for the 3rd-most outflow in their history of a little over a ... [...]

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Wednesday Color - Gaps, Confidence, Staples, May Loss, Options Fear

Here's what's piquing my interest on another morning with a largish negative gap open.GapStocks are showing another large negative gap this morning, adding to what has been a near-record cluster of anxious openings. Forgetting the fact that this comes on the heels of that cluster, we can see ... [...]

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5 Signs Of Anxiety

Anxiety signalWhile stocks have struggled, bonds and the dollar have both been rising. Whether one is helping the other is beside the point – primarily it suggests nervousness on the part of investors.When those two markets have behaved like this over the past 40+ years, stocks have usually ... [...]

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Monday Midday Color - Gaps Again, Sector Divvies, Flight To Safety

Here's what's piquing my interest on yet another weak day so far.More PanicYet another gap down open this morning, as the weeks-long pattern of pre-market panic continues. We've already looked at this a few times, but there's perhaps a better way to consider this.The gaps we've been seeing at ... [...]

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Wednesday Midday Color - Big Outflows, More Hedging, Falling Momo

Here's what's piquing my interest so far today.FlowsOn Tuesday, there were outflows among a large number and variety of equity funds. A bunch of them lost more than $25 million in assets on the day, led by the two most popular.That continues a trend for both SPY and QQQ. Across all of the major ... [...]

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Options Traders Just Did Something They've Never Done Before

Call selling hits record lowThe smallest of options traders have spent the past 5 weeks buying to open speculative call options at one of the highest rates since the financial crisis. And they’ve given up trying to collect premium by selling call options, which would limit their upside. That ... [...]

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Uh-Oh, Options Speculators Are Back

Sector battleThe ratio between the S&P 500’s technology and health care sectors has swung by an extreme amount. The 50-day rate of change in the ratio between the two has cycled from negative to a 10-year high.Since 1990, other times it swung like this, tech suffered, while health care held up ... [...]

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Monday Midday Color - Smart Money, Biotech, Options Optimism

Here's what's piquing my interest so far on a quiet Easter Monday session.Smart MoneyLast week, hedgers continued to build up their positions in some of the agricultural contracts. In corn, they went net long by more than 94,000 contracts, the most since 2017. That's more than 5% of open ... [...]

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Wednesday Midday Color

Here's what's piquing my interest so far on this waiting-for-the-Fed day.Mexican MomentumIn Friday's report, we saw that "The MSCI Mexico Index closed above its 200-days for the first time in six months on Friday. Other times it went this long before ending a downtrend, it added to gains over ... [...]

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Monday Midday Color

Here's what's piquing my interest so far today.This Little Piggy Goes To MarketHog futures have soared. Corn has not. The ratio between the two is now at an extreme.There are a large number of factors that go into the price gyrations of both markets, but historically there has been a loose ... [...]

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Stocks, Bonds Rise As Volatility Diverges

A balanced investor’s dreamThe S&P 500’s total return over the past three months is well over 10%. The total return in an aggregate bond index is up over 3% at the same time, a large move for that market.When both markets enjoyed such large total returns over a multi-month period, it tended to ... [...]

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Options Traders Bet On Decline As S&P Meets Target And Utes Surge

Options bets and strategists’ spreadAs stocks rally, options traders have built up a large position in S&P 500 put options, relative to the number of outstanding calls. It’s the opposite in VIX options, where they have few puts and many calls. Since 2006, this has led to a negative annualized ... [...]

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Monday Midday Color

Here's what's piquing my interest so far today. Confident TradersThe weekly summary of options trading across all U.S. exchanges shows that the smallest of traders are still buying calls to open at a pretty aggressive clip. They spent 39% of their total volume on purchasing speculative call ... [...]

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Catching Up

I'm taking some time for spring break with our kids, but here are some things that are piquing my interest right now.Nothing has really changed the past few days. We're still seeing mostly mixed equities with the rebound so far today, and a relatively poor risk/reward profile over the ... [...]

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Options Bulls Return As Investors Get Whipsawed

Options bulls returnThe smallest of options traders spent nearly 60% of their volume last week on bullish strategies, either buying call options or selling puts to open. That’s among the most aggressive bullishness using real money since the financial crisis.There were some weeks that showed ... [...]

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Monday Midday Color

Here's what's piquing my interest so far today.ReversalPretty nasty-looking outside reversal in indexes and funds like SPY today. But...be careful. These have a terrible habit of not working like chartists insist they should. Following is every time SPY gapped up above the highest close in the ... [...]

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Most Stocks Are Rallying; Put Open Interest Is Rising

This is an abridged version of our Daily Report.Stocks are rallyingEven though the S&P 500 is nearly 10% below its high, its Cumulative Advance/Decline Line has rebounded so much it’s almost at a new high.That’s a positive divergence, but historically there hasn’t been much positive about it, ... [...]

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Another Volatile Session

This is an abridged version of our Daily Report.Another volatile sessionSome early optimism on Thursday was quickly erased, and stocks dove to new lows for this move. In the process, it triggered several extremes:* The Nasdaq is on the threshold of a 20% decline.* The percentage of securities ... [...]

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Mexican Stock Collapse; Small Traders Load Up On Puts

This is an abridged version of our Daily Report.Heavy selling south of the borderMexican stocks have dropped 30% from their highs in US dollars and 20% in pesos.This has nothing to do with the politics of the new administration, which admittedly is a big omit. In emerging markets, new ruling ... [...]

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Puts Are Popular; No Sector Funds Are Beating Cash

This is an abridged version of our Daily Report.Puts have become popularSince the market peaked in September, most days have seen at least 10% more put options traded than call options, the largest cluster in three years. Out of a total of 27 days in the sample, the S&P was higher two months ... [...]

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Insiders Buy; A Selling Climax; Small Traders Panic

The weekly indicators that just came out show some interesting extremes.Corporate insiders picked up their buying interest, now that an increasing number of companies are outside of their restriction window during earnings season. This isn't my favorite indicator, especially when it shows ... [...]

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V-Shaped Bounces And Explosion In Hedging

This is an abridged version of our Daily Report.V-shaped probabilityFollowing declines like the past month, v-shaped bounces were common. Almost 40% of the precedents formed a bottom within a couple of sessions. While some short-term volatility was normal, all but a few of the precedents ended ... [...]

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A Little Panicky

With a failed bounce attempt intraday, we're starting to register a few more signs of notable pessimism or even outright panic. It's understandable, since this would be one of the few times in modern markets when the S&P 500 suffered back-to-back 2% losses during a generally uptrending market.As ... [...]

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Options Bulls Reign As New Lows Rise Even Amid Good Price Momentum

This is an abridged version of our Daily Report.Calling all bullsOptions traders are showing a historic preference for speculating on the upside. In recent weeks and months, they’ve spent most of their options volume on buying speculative calls.At the same time, they don’t want to risk a large ... [...]

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Yields Not Nudging Dollar As Black Swans Get Priced In

This is an abridged version of our Daily Report.Dollar dips despite rate riseThe yield on Treasuries has jumped, but it’s not resulting in a perkier dollar, even though the two usually move in broadly the same direction.The two markets do sometimes decouple, and that has usually led to more ... [...]

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An August High As Option Speculation Ramps Up

This is an abridged version of our Daily Report.Summer highStocks ended August at their highest monthly close in at least 36 months. A new high in August has preceded poor returns during the next 1-4 weeks as September lived up to its reputation. The S&P struggled to hold its gains, especially ... [...]

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Dow's Streak Snapped As China ETF Nears Bear Market

This is an abridged version of our Daily Report.Had to happen sometimeThe Dow Industrials Average ended its 2-year streak of holding above its 200-day average, its 7th-longest streak in an uptrend since 1900.It wasn’t a death knell for the index, especially when the Leading Economic Indicators ... [...]

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Small Options Traders Get Aggressive As Soybeans Fall

This is an abridged version of our Daily Report.Small traders become aggressiveThe smallest of options traders have become remarkably aggressive in betting on a market rally.Their volume of opening call purchases is nearing record highs, last seen in 2000 and 2007. They are spending more than ... [...]

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Options Traders Go All In As Investors Flood Into TIPS

This is an abridged version of our Daily Report.Options traders go all inOptions traders have rushed into bullish strategies at the expense of more conservative ones. Total call volume last week mushroomed to 32 million contracts, the highest since late January, while put volume was about ... [...]

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Failed Bounce And Put Purchases

This is an abridged version of our Daily Report.Failed bounceBefore some modest after buying interest, the most important index in the world triggered a failed bounce.That’s one of the most feared patterns for bulls because it shows a complete lack of buying interest. The S&P did suffer ... [...]

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Gold Miners Lag As Investment Managers Sell

This is an abridged version of our Daily Report.Miners’ minor monthsGold mining stocks have underperformed gold prices by more than 10% over the past couple of months.Due to their higher volatility, this is considered a negative for gold prices going forward. There is some modest truth to this, ... [...]

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Unfolding Momentum

This is an abridged version of our Daily Report.CrashMonday’s trading – and post-close moves – are the types of action only seen a few times in history. Large, swift declines from a high have tended to lead to capitulatory moves that lead to rebounds in the medium-term. The possible liquidation ... [...]

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Cornucopia Of Extremes

With the rapid moves and number of extremes, there are quite a few things that stick out beyond what we went over in the report on Monday. These are what we posted to the private Twitter feed, which you have access to if you're receiving this Note via email. Just request to follow ... [...]

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Buying Climaxes As Small Traders Buy But Futures Gap Down

As we head into the new week, we're seeing the selling pressure from Friday bleed over, which is what has usually happened according to the type of behavior we went over in Friday's report.Over the weekend, a couple of indicators showed notable readings. The number of buying climaxes among S&P ... [...]

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Options Traders Pour Into Calls As Breadth Lags

This is an abridged version of our Daily Report.Forget stock, call options have more oomphRetail traders have returned in a big way. We saw on Friday the surge in brokerage transactions, and that has bled over into the options market. The smallest of options traders put on a skyrocketing number ... [...]

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Global Momentum Spurs Melt Up Chatter

This is an abridged version of our Daily Report.Global synchronized momentumMost major stock markets are not only rallying, they’re showing extreme momentum. The weekly Relative Strength Index across 6 major global indexes is now the highest in history.High readings in that indicator suggest ... [...]

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Options Worries As Energy Breadth Surges

This is an abridged version of our Daily Report.Trouble signs from the options marketTraders in VIX options appear to be betting on a spike, and they’re usually right. The few other times the options market was set up like this, volatility spiked.Meanwhile, traders in SPY options have been busy ... [...]

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Housing Optimism Helps Gap And Go Attempt

This is an abridged version of our Daily Report.Housing optimismConfidence among those in the housing industry has jumped to one of the highest levels in 30 years. Similarly high levels led to poor returns in home building stocks, but good returns in suppliers like Home Depot and Lowe’s.Over the ... [...]

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Bullish Mom And Pop And Options Traders

This is an abridged version of our Daily Report. Shades of 2000 for mom and popIndividual investors haven’t had this small of a cash cushion since 2000. In November, their cash holdings dropped below the prior recent lows in 2015 and August of this year.At the same time, they are heavily ... [...]

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Misleading Buy Signal In Options

It's somewhat difficult to find any indicators among the many we follow that are showing excessive pessimism toward stocks. On any given day lately, there have been maybe two or three.One that has shown up for the past several days is the Call/Put Ratio from the ISE Exchange. Over the past three ... [...]

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