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Stocks Tank As Reality Is Starting To Set In

ByMichael Kramer
Published 12/17/2021, 02:48 AM
Updated 09/20/2023, 06:34 AM

I shared this video with members of my SA Marketplace service RTM yesterday. I hope it helps explain a few things going on from my viewpoint.

So it turns out that Wednesday was just a Vanna squeeze, with implied volatility dropping sharply, ramping up stock prices. The VIX started falling at 2:02 and never looked back. That’s over now.

The S&P 500 futures have an interesting tale of their own. At one point yesterday, they traded at just a touch above their previous intraday high, hitting 4743.25, versus the high on Nov. 22 of 4740.50. It was all downhill from there.

The S&P 500 fell just over 2% from intraday high to low.

S&P 500 Futures 15-Min Intraday Chart

It gets better because the NASDAQ 100 futures traded to a high of 16,457 yesterday, and just above that 16,445 level we have been using as resistance since Nov. 25. It was straight down from there too. The NASDAQ 100 fell about 4% from the intraday high to the intraday low.

Nasdaq-100 Futures 15-Min Chart

Very strange price action.

Today will be another exciting day with S&P 500 options expiring on the open along with stocks on the close. Maybe the market makers will try to get the S&P 500 back up towards 4,700 to salvage that strike price. But once that gamma comes off the board today, I think you will see more of yesterday’s actions. As I have said for months reducing QE is tightening because financial conditions tighten. I track a number of spreads used in the Chicago Fed National Financial Conditions Index, and based on that, tightening has continued this week.

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US National Financial Conditions Index

Apple

Apple (NASDAQ:AAPL) fell sharply, giving back all of its gains from Wednesday, and has a lot of gaps to fill at lower levels. I love Apple, I own it, but this thing needs to come back to around $165. It is just way overbought, and the gamma squeeze has lived its life, but it’s over now.

Apple Inc Daily Chart

NVIDIA

I think NVIDIA (NASDAQ:NVDA) is in the same place as Apple, with a gamma squeeze that took it higher and now needs to deflate, with $265 being its support.

NVIDIA Corp Daily Chart

Anyway, that’s all

Original Post

Latest comments

Lol what a terrible “article” 😂😂Another fear driven sell off that will be short lived. The market will rally to ATH’s before year end
RELAX. It's all part of Building Back "Better". L.G.B.
Omicron is a scamacron …. Markets are dying because banks dont want worthless treasuries without higher yield
Good read. Thanks
omicron is probably not a *******but it is so contagious that it's likely to disrupt economies around the world for the foreseeable future and that might spell trouble for a market priced for perfection. most people that talk about "just a flu" probably have never had the flu because if you've had it you know how bad it can be. even if it's 50% as bad as the flu that still means billions of sick days and lack of production around the world
we're still pretending the vaccinated don't get it or transmit it I see.
of course vacinated transmit it and catch it, I dont think that's up for debate. however, if you're vacinated you are less likely to catch and transmit it and have serious illness. in ontario we are 85% vaccinated and half of all reported cases are vaccinated....half, not 85% so obviously the vaccine works.
lol how do you figure?
Thank you for the article
you are rarely correct but I have to concede.. they will probably rally next week and consolidate the new year.
I think the reality of the Fed tightening has taken hold. The melt up after Wednesday was a very off outcome. Because money velocity will go down and intrest rates will go up making the market valuation way too high. The Fed also needs to unload its balance sheet before rates go up to much so expect that to start happening as well. Sentiment is extremely bullish which looks more and more like a contrarian indicator. Lots of slow downs across all major asset classes. Inflation is raging and only going to get worse. I expect we see some good draw downs going into year end. The fact the market has never really corrected willl give people all the more reason to sell.
you're right, thank you
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