Mid-Week Market Recap
🎯 Key Takeaways
- Bullish Trend Continues: 2 closes above Friday's Point of Control
- Gamma Risk: We remain inside the weekly expected move, gamma risk is dormant until +/-1SD is breached
- Friday Simple Sheet Prediction: Bullish bias with low conviction strength
🔍 What Just Happened?
We have remained inside the weekly expected move with no statistically significant movement. This means institutional hedging activities have not been triggered, as we haven't breached the critical thresholds that would necessitate hedging.
🔮 Friday's Setup
The early week bullish action typically dictates Friday's direction—and we've been trading ABOVE the weekly PoC, reinforcing this bullish bias. Our indicators show low conviction on the strength of this move.
⚡ Power Hour Opportunity
With the market trading inside the weekly expected move, we remain cautiously neutral until the 1SD level is hit and breached. Gamma risk exists but is contingent on reaching these levels first.
📊 Standard Deviation Journey
Monday, Tuesday, Wednesday - no significant movement
📊 Mar Friday Trend Predictions
1 out of 2 correct (50%)
Check out the Simple Sheet Results every week to see how this basic analysis seems to get it right week in - week out.
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This newsletter contains automatically generated content based on market conditions and predetermined parameters. Due to the algorithmic nature of our analysis, some content may resemble other publications when similar market patterns occur.
🧠 Deeper Dive
Where is Gamma
We have remained inside the weekly expected move. Funds sell SPX options at the 1SD level, and only when this is breached do they need to hedge by trading ES contracts in the direction of trade. Since we haven't touched either the +1SD or -1SD level, no significant hedging activity has been triggered.
Gamma Risk
Gamma risk is present but dormant while we remain inside the weekly expected move. For gamma risk to become active, we would first need to breach either the +1SD or -1SD level by more than 20 handles, which would then trigger institutional hedging activities.
Expected Friday Trade
Bullish. Friday trends are usually set by early week trade and are hard to reverse.
Friday's Potential
The simple sheet is giving us low conviction into the strength of the move for Friday. We expect to close 15 handles around today's close.
📖 Understanding our Terms
Gamma Squeeze: Market movement amplified when dealers must buy/sell to hedge options positions as prices move, creating a feedback loop
Short Hedges: Positions taken to offset potential losses in existing portfolios
Gamma Risk: Exposure to accelerated price movements due to options hedging activity
Point of Control (PoC): The SPX close for Friday the week prior; serves as a reference point for the current week's trading
Confluence is King: A trading signal triggered when the weekly expected move coincides with the daily expected move for the next day