Triggers Were Crossed. The Ten Things To Know This Morning
1 - Triggers were crossed
Looks like the first CTA puke officially started yesterday. Likely that there will be more. UBS trading desk reports:
1. NQ1 sell triggers were crossed at 11:32am and 12:06pm
2. The largest futures volume spike started at 11:30am-11:45am interval at 187% of average ($18bn)
3. After 2 hours of selling, excess flow turned to small buying @ 12:45pm for both Nasdaq and S&P futures - suggests CTA selling pressure is over but next trigger is only -0.5% away
Source: UBS trading desk
2 - Accessing liquidity
April ETF volumes (as % of tape) is at 31% vs 26% for March. Investors use ETFs as a tool to use to access index liquidity.
Source: GS
3 - “It's liquidity that moves markets”
Extra topical quote by Stanley Druckenmiller. Right now, we have much less of it compared to just a few weeks ago.
Source: GS
4 - Bulls are losing control
"Since 1990, I found 20 other times the S&P 500 opened green, but eventually closed red three consecutive days. Negative returns on avg a month later and up only 55% of the time. Could this be a subtle clue the bulls are losing control?" (Ryan Detrick)
5 - Sizing up the draw-down
The S&P500 drawdown vs the last "major" one.
Source: Zero Hedge
6 - Growth jitters
1. ASML -7% spilling into broader Semis including NVDA -3.9% which contributed to ~35% of SPX move lower.
2. JBHT a bellwether transport -8%, Industrial REITs -3.7% on the back of a neg print from PLD -7%.
3. All of the above weighing on the Momo trade -1.3%.
(GS trading desk)
7 - Technical correction
The Philadelphia Semiconductor Index and Nvidia dropped more than 3% each Wednesday, pushing them down more than 10% from record high levels reached in March.
Source: Bloomberg
8- The bull on steroids is now a bear
Recall the 2x geared NVDA exposure people were chasing only a few weeks ago? The NVDL is down over 20% since all time highs. It closed below the 50 day yesterday.
Source: Refinitiv
9 - Hello stagflation
"Keep our stagflation proxy (GSPUSTAG) on your radar, up ~7% in just under 30 sessions with the inflation narrative turning and growth possibly coming into question" (GS trading desk)
10 - US 10 year holds the keys
The 10 year got a little too excited. Note we reversed right at the upper trend line. First short term support at 4.5%. The bigger support is at the break out level, 4.35%. Let's see how this develops, but the 50 crossed the 200 day a few sessions ago, putting in the golden cross.
Source: Refinitiv
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