The Morning Call
4/17/26
The
Market
Technical
Thursday in the
charts.
Summary:
Dramatic decoupling between oil and bond yields (both up)
and stocks (up notably, led by tech) as stocks broadly shrugged off
ceasefire-deal-timeline doubts and the 'spot up, vol up' chase into
OpEx accelerated. The dollar (unch), gold (unch), and bitcoin (unch) all
moved in a tight range on the day. and remember, as we detailed earlier, tomorrow brings with
it a big 'gamma unclench' which could threaten the stability of
this meltup in stocks.
Thursday in the
technical stats.
https://www.barchart.com/stocks/momentum
https://www.barchart.com/stocks/market-performance
https://www.barchart.com/stocks/sectors/rankings
https://www.barchart.com/stocks/signals/new-recommendations
Whiplash rally.
https://www.capitalspectator.com/whiplash-rally-stocks-hit-new-high-just-days-after-sharp-drop/
Warning signs
building.
https://www.zerohedge.com/the-market-ear/nothing-matters-until-it-suddenly-does
Summary:
The market has been quick to dismiss macro signals, with flows and positioning
continuing to dominate the tape. What looks like a strong move higher is
increasingly being driven by mechanical buying, not fundamentals. At the same
time, several warning signs are starting to build beneath the surface, with
narrow leadership, stretched positioning, and cheap hedging standing out.
Upside grab faces
major ‘gamma unclench’ today.
https://www.zerohedge.com/markets/spot-vol-upside-grab-faces-major-gamma-unclench-hurdle-tomorrow
Summary:
The dealer gamma position is currently an extreme long. This is the single
biggest signal change this week. Into OpEx tomorrow, dealers are now massively
long gamma, which means they sell into strength and buy into weakness - the
market is blanketed in a dampening effect. This sets up a grind/pin scenario
into Friday's expiration. The base case is SPX stays in the 7,000–7,040
range unless today's data or geopolitics delivers a shock. Stay with the index
vol sell / single stock vol buy structure - this is the last 24 hours where
that trade has maximum gamma tailwind. Into next week we think there
will be an equity correction as the index vol support goes away, and positive
gamma tumbles.
Goldman trader not
chasing upside.
Summary: Lessons learned...1.) everything
is technical in the short term… fundamentals are a crutch. And…2.) being early
= being wrong.
From here...key risk is that
CTA + expiry demand fades after this week. Watching PB data
for evidence of re-risking. One clear signal… massive SPX call delta
buying this week. I’m still cautious… not chasing upside here… but
waiting to see if flows exhaust and fundamentals reassert.
However, retail is
chasing the upside.
https://www.zerohedge.com/markets/after-panicking-bottom-retail-now-chasing-meltup
Summary:
Retail flows improved to $6.6B this week, just below the 12-month avg of
$6.7B/week. Retail investors continued to favor ETFs (+$4.7B) over
Single Stocks (+$1.9B). Outside of Broad Based Equity ETFs (+$1.8B), retail ETF
buying was influenced by Equity Sector Technology (+$344M, 2.1z), Equity Style
Call/ Put Writing (+$198M), Fixed Income — Multi Sector (+198M) and Equity
Style Dividend (+$196M). Conversely, retail investors sold Fixed Income — Money
Market (-$263M, -2.6z) and Short-Term Treasuries (-$167M, -3.8z). This week,
and in line with prior weeks, retail investors continued to buy AI
datacenters and electrification (JPAMAIDE), Top 30 AI/Datacenter Beneficiaries,
Mag 7, along with Growth and AI Software/Product/Monetization. Activity in
Mag7 this week: Retail investors bought: MSFT (+$611M, 2.3z), TSLA (+
$517M), META (+$193M), GOOGL/GOOG (+$113M), AAPL (+$25M), and sold: AMZN
(-$70M), NVDA (-$94M). Outside of Mag7, retail investors favored
Tech (+$704M), Industrials (+$242M) and Financials (+$140M) and were net
sellers of Energy (-377M), Health Care (-$89M) and Consumer Discretionary
(-$74M). Top 5 retail stocks last week: MSFT (+$611M, 2.3z), TSLA (+$517M),
SNDK (+ $246M, 3.0z), META (+$193M) and TSM (+$159M). Bottom 5 retail stocks:
NVDA (-$94M), AMD (-$90M), NBIS (-$89M, -3.2z), XOM (-$82M) and AMZN (-$70M).
And so are CTAs.
Summary:
And what is even more remarkable is that the bank's futures strategists have
this cohort modelled to purchase an additional $70 billion of the next
5 sessions... and that's in a flat tape. As a reminder, CTAs buy VWAP
style, and on days like yesterday and today, with little news out an a
constant grind higher of the S&P, shows just how impactful they are in the
market. What happens next? While past performance is not indicative of
future returns, Garrett writes that previous episodes of accelerated CTA demand
have seen short term consolidation, followed by medium term strength for
S&P500 (t+1 month =+ 2.19% avg return, t+3m = +8.18% avg return).
Friday morning
setup: Stocks are pushing higher again on the same old regurgitated news:
namely speculation that a deal to end the war between
the US and Iran is getting closer, the same exact "speculation" that
has pushed the Nasdaq higher for what will now be 13 days in a
row, and the same speculation that may keep pushing stocks even higher
until the reality of no ceasefire sends risk plunging in a few days. For now
however, it is sufficient to lift markets thanks to the relentless CTA VWAP
grind higher, and as of 8:15am, S&P futures are 0.4% higher, with Spoos
trading above 7100 while Nasdaq futs gain 0.3% after both gauges hit record
highs Thursday, with all Mag 7 stocks trading higher in the premarket (MSFT
+1.1%, AAPL +0.8%). Netflix tumbled 10% after it gave a disappointing Q2
forecast and Reed Hastings announced he is stepping down as Chairman. The
dollar was down 10 bps and headed for a February low. Global bonds were mixed,
with the 10-year Treasury yield down two basis points at 4.30%. Overnight,
headlines were largely quiet: while the date of the second round of US-Iran
talk has not yet been determined, Trump signaled that talks could resume this
weekend. Oil prices are extending their decline: WTI is down $4 below $88
with both Brent and WTI are both down around 4% for the session as traders
await details of talks between the US and Iran following optimistic
comments from President Trump. Base metals are all higher led by aluminum
(+0.6%); Ags are mostly lower. No economic releases are expected
today. Fed’s Daly, Barkin and Waller are scheduled to speak at
events. Fed’s blackout period begins Saturday.
Fundamental
Headlines
The
Economy
US
International
The February EU
trade balance was +E11.5 billion versus consensus of +E11.7 billion.
Other
Americans using tax refunds to pay down debt.
Jobless claims continue to be the most
positive economic indicator.
https://bonddad.blogspot.com/2026/04/jobless-claims-continue-to-be-most.html
Iran
Overnight:
Cash for nukes?
What the blockade means for Iran’s economy.
Monetary
Policy
The Fed chair showdown.
ECB minutes
confirm hawkish pivot.
https://talkmarkets.com/article/ecb-minutes-from-march-meeting-confirm-hawkish-pivot-1776345607
Inflation
Drought affecting 60% of US farmers.
https://www.zerohedge.com/weather/drought-engulfs-60-us-farmers-begin-spring-planting
Aluminum market descends into supply black hole.
https://www.zerohedge.com/commodities/aluminum-market-descends-supply-black-hole
Gulf war leaves $58 billion repair bill.
https://www.zerohedge.com/energy/gulf-war-leaves-58-billion-repair-bill-and-global-equipment-crunch
Critical shortage
of jet fuel.
Gulf war may spark shortage of critical
industrial chemical.
The
Financial System
The private credit
problem says more about Washington than it does about finance.
Banks increasing exposure to trading firms
increase ‘inherent fragility’.
https://giftarticle.ft.com/giftarticle/actions/redeem/14e0c0fb-2c0b-4b6a-a57f-07e3b1df1122
The
Dollar
The dollar is not dead nor dying.
https://www.advisorperspectives.com/commentaries/2026/04/16/on-mind-dollar-dead-long-live-dollar
Investing
Understanding
volatility.
https://larryswedroe.substack.com/p/understanding-market-volatility-what
April outlook for
dividends.
https://politicalcalculations.blogspot.com/2026/04/the-outlook-for-s-500-dividends-in.html
News on Stocks in Our Portfolios
What
I am reading today
The
regulatory battle to make gold a bank asset.
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