Mid-Week Market Recap
🎯 Key Takeaways
- Bullish Trend Emerges: 1 closes above Friday's Point of Control
- Rare Market Volatility: Both the upper and lower standard deviations for the week have been touched this week, a very rare event indicating exceptional volatility
- Gamma Risk: We have touched the 1SD level. If we breach it by 20 handles AND strong volume, expect gamma risk to be triggered to the 1.5SD level
- Friday Simple Sheet Prediction: Bullish bias with low conviction strength
🔍 What Just Happened?
We've experienced a rare market event this week where both the upper and lower standard deviations have been touched. This indicates exceptional volatility and potential market indecision, with significant price swings in both directions. This type of price action often signals a market at an inflection point, with institutional traders actively repositioning.
🔮 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 both the upper and lower standard deviations already touched this week, the market has demonstrated exceptional volatility. For Friday's power hour, expect potential consolidation rather than a directional move, as the market has already explored both extremes of the expected range.
📊 Standard Deviation Journey
Monday, Tuesday, Wednesday - no significant movement
📊 Apr Friday Trend Predictions
2 out of 3 correct (66.7%)
Check out the Simple Sheet Results every week to see how this basic analysis seems to get it right week in - week out.
Follow us on Twitter for live intraday commentary and always reach out if you have any questions.
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.
👑 Confluence Alert
Confluence is King has been triggered! The daily expected move coincides with the weekly +/-1 standard deviation, creating a high probability trade setup.
🧠 Deeper Dive
Where is Gamma
We have experienced the rare event of touching both the +1SD and -1SD levels this week. This indicates exceptional volatility and market indecision. Funds that sell SPX options at both the +1SD and -1SD levels have been forced to hedge in both directions, creating a complex hedging environment. This type of price action often signals a market at an inflection point, with institutional traders actively repositioning.
Gamma Risk
The market has demonstrated exceptional volatility by touching both the +1SD and -1SD levels this week. This creates a complex gamma environment where expectations of hedging to +/-1.5 is diminished.
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