Yet another horrible day in markets after a promising start. The mid-term election are tomorrow so it is not surprising that traders don’t want to commit significant capital here.
Market Overview
The SPY is now sitting on 2 consecutive closes below the 21 EMA, and today’s action is not helping the case for bulls. We broke hard on October 30th and have not been able to reclaim ground since. The 8 EMA at 764.11 and the 21 EMA at 766.82 are converging and both sitting above price, which is a weight on any intraday bounce attempt. The 50 SMA at 766.66 is basically sitting right on top of the 21 EMA, so that whole 764-767 zone is now resistance. VIX at 20 is not screaming panic but it is elevated enough to keep swing traders cautious here.
The dominant theme in morning flow is big-money index bulls, with multiple SPX bullish risk reversals stacking up across Dec26 expiry totaling well over $90M in combined premium, plus $14.8M in outright SPY calls bought at the 785 strike. QQQ call buying is also heavy, with several large prints targeting Sep27 and beyond at the 850-900 strikes, suggesting institutions are positioning for a multi-month recovery. The SPX bearish risk reversals in the mix are comparatively small notional, so the flow is skewing bullish at the index level despite the weak tape this morning.
There is no flow or rarity flow that I want to highlight today other than give you some broader sentiment indicators.
This is option flow so far today in my Discord. This is pure directional and includes 3 opening conditions and no tied trades. It is also subject to premium tier thresholds by market cap. In summary it is a very clean signal:
Bulls are dominating despite the tape and the chop.
Now lets look at rankings. These are the individual tickers that are leading the flow. Same conditions apply as above.
Dark pool flow is pretty balanced at the moment so it is not helping us with convergence
Later in the day we are likely to see this lean net bullish or bearish
Here is GEX for SPY and QQQ
Both in negative gamma.
All of this information is readily available to members in my Discord under the full Institutional Grade Trading Platform