Windowofweakness — Trading Ideas on TradingView

If we crash it will look like this.JHQTX and OPEX Window of Weakness 1. Vanna and Charm Flows gain strength 2. VIX Print for the month 3. Window of Weakness Options and Vol are entering in a very fragile time when flows can be at their technical weakest. When social media start speaking about goldilocks (economy goes not to hot, not to cold). That could be this months OPEX (Options Expiry). A slow grind higher into CPI is likely due to well supplied vol leading up to the event. But CPI is likely to be a catalyst into VIX and OPEX prints. My outlook is that anything above the 20D is a buyable dip right now. If dealers Gamma Exposure suddenly moves negative before CPI and Vix Expiry I will be the first to clang the cow bell. There are 3 big hedged equity funds I monitor from JPM and JHQTX is the smallest of the three, which means technical flows from this fund are the weakest of the monthly rolls. Flows from JHEQX (largest fund) and JHQDX (middle fund) are stronger 20 days before expiration as Gamma becomes a bigger factor and IV that spikes from a weak VIX print into OPEX bleeds off into end of month expiry options like our HEFS. Months that JHEQX and JHQDX pin the market to a certain expiry with supportive flows, JHQTX tends to be the runt of the litter because it always ends up coming in short. The weakest point in markets will be Feb 15th - 28th. The next weak spot would be May 17 - 19

Window of Weakness There are specific times when the bottom gives out on the markets and we get big drawdowns. Other times, what you think is going to bring down the markets is actually giving them more resilience. The Market is not the economy. It will do what it needs to. In 2008 it was liquidation of banks. In 2020 it was a threat to our way of life. Tomorrow, who knows. One thing I can tell you is there are times (a window if you like) of weakness in markets that can be predicted. We’re approaching one of those such windows now. Today is a good reason to have downside protection. JP Morgan Hedged equity funds is 1 indicator I use to determine where these windows could be and where they have occurred in the past. The market tends to have an easier time to breakdown during the 1st week of the 3rd month of the smallest JHQTX funds rollover occurs. This window of weakness usually spans into the funds reset and 1 week after. My assumption is that the smaller of the hedged eq funds have much less reflexivity during the expiration. Unlike the rally I called in October. This time is more of a warning than a prediction. A miss on CPI could almost certainly trigger a sell off in equities. I think a beat on CPI tomorrow will break the markets above the 50D and set up for a retest of the 200D in the coming weeks leading up to Christmas. One needs to be mindful of both tails tomorrow. You combine a HOT CPI number with the QT in bond markets and bitcoin doing exactly what everyone predicted. You have yourself a bonafide crash risk in the works.

15 Minute Technical Today Big fan of FinTwit and 15 minute VIX. Falling Wedge Reversal Pattern StrizziJ Calls out the top this morning on Tue 15min. Cem Karsan (Jam Croissant) explains in a tweet in January that these are Vanna Flows. Vol down every day means buying indices overnight. Vol up means selling overnight. Vanna/Charm flows are hedged by banks & naive primary dealers on the open of US trading & into close. He further points out that Algos & European traders front run these flows starting around 1am CST to sell on US Open. Cem believe the excess risk adjusted returns are 100% a result of captive Vanna/Charm flows… Cem also posted in a tweet on Monday about an upcoming window of weakness in Vanna/Charm flows. Direction after July 13AM? Likely a lot of CPI pain to come. Oil is a big issue at G7. Burry is calling for a Bear rally before the big siesta. Bears gotta eat before hibernation.