Welcome to (tech) upside panic

Panic call buying - QQQ edition

The upside panic in a pic. With implied vols at rather low levels, just use those options to play direction, and/or get some long gamma onboard and hedge the deltas. These moves are huge, and gamma is cheap. Long gamma is always a good way to "regain" confidence and trade the market from the "right" side, in case the last moves have confused you.

Source: Spotgamma/Hiro


The concentrated NDX bull

The NDX vs NDXE (NDX equal weight) ratio is surging today again. The move in 2023 is "impressive"!

Source: Refinitiv


Rich getting richer

The NASDAQ vs Russell ratio continues pushing new recent highs. We are at September 2020 level, not far from the post Covid tech panic buying (relatively speaking).

Source: Refinitiv


Mighty tech in a pic

The majors and NDX. Note META is up 100% YTD.

Source: Refinitiv


The ones that have to buy

The ones that have to, or let us rephrase, can buy. Equity beta shows some improvement recently but is still largely subdued.

Source: Barclays


Time for semis (again)?

The SMH is down top the trend line that has been in place since October lows. Note the ETF is putting in a hammer candle at big support levels. That is the short term view. What about the longer term picture? Soc Gen has long semis as one of their core ideas. They turned bullish in November, and see much more upside: "With the current cycle only seven months long, there should be plenty of upside left. Considering the liquidity and inexpensiveness of options, we prefer the KOSPI 200 index to position for upside on this theme." See chart 2 for more details.

Source: Refinitiv


Source: Soc Gen


GS: end of hiking, but no start of recession

"....Fed’s hiking cycle is now in its home stretch, and that current rates market pricing of extensive cuts looks too downbeat relative both to our base case and to market pricing of the growth outlook, with the yield curve at levels historically consistent with very high probabilities of a US recession starting in the next 12m, which we continue to believe isn’t coming. Indeed, we find that the US consumer remains relatively healthy and expect goods consumption to remain relatively strong, which, together with encouraging recent labor market and inflation news, leads us to maintain our view that the US economy is set for a soft landing." (Goldman)

Chasing protection - upside down edition

The crowd keeps nailing the inverse hedge logic. They loaded up on puts at the most recent market lows, only to puke that protection as markets reversed higher again. Capital destruction...

Source: Tradingview


Longer term equity volatility and real policy rates

Soc Gen's derivatives team have shown that real policy rates tend to impact single stock volatility with a 3 year lag. They write: "...the effect of the current tightening is unlikely to visible in large-cap stocks for several more quarters. First, as per this model, fundamental volatility from stocks should head lower."

Source: Soc Gen


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