Tl;dr: Today was a battle of CTA selling vs 0DTE call buying in the face of hawkish macro and bullish micro...
A hawkishly-hot Core PCE print dominated the morning headlines today, but GDP was also marked down, Claims confirmed a tight labor market (hawkish), and NVDA proved that AI is all that matters right now (+14% to its highest since April 2022 - up 120% from Oct lows)...
Source: Bloomberg
All eyes are now on tomorrow's January PCE report, along with new home sales and an update to the UMICH's Consumer Sentiment survey.
NVDA's strength lifted all boats early on... then the GDP data hit - a strong PCE print and the cash open saw a wave of selling sweep all the majors lower with the S&P breaking back below 4,000 and the key 50-day moving average... which triggered a wave of buying...
The bulls need to defend these key levels:
As there is still CTA exposure to be sold...
That epic liftathon was led by a dramatically aggressive effort by 0DTE call-buyers to regain control as stocks started to tumble (with 0DTE call buying all the way down)...
...and that triggered just the momentum they wanted to create a classic short-squeeze as 'most shorted' stocks soared...
Source: Bloomberg
...with all the majors melting up into the green, led by Nasdaq (The Dow was the ugliest horse in today's glue factory but still managed a gain, holding green YTD)...
That was a serious swing in Nasdaq (well all the majors really).
VIX ended notably lower, back to a 20 handle...
Stocks remain alone in their exuberance as gold, the dollar, and bonds have all retraced the January 'one-way' trade...
Source: Bloomberg
Treasury yields were lower across the board today, with bonds bid on the GDP data after overnight weakness. The long-end outperformed today (2Y -0.5bps, 30Y -4.5bps) which pushed 30Y yields lower on the week...
Source: Bloomberg
The dollar ramped up to last week's highs, ran those stops, and reversed to end the day lower...
Source: Bloomberg
Bitcoin was once again spanked back below $24,000 overnight, but rallied back up to it during the US session...
Source: Bloomberg
Gold continued to drift lower, but found support at $1825...
Oil prices rallied - breaking a 6-day losing-streak - with WTI back above $75...
And finally, while everyone is commenting on the drop in NatGas prices, it is worth bearing in mind that while the US is paying around $2, Europe is still paying around $15... a still huge premium historically...
Source: Bloomberg
That ain't cheap and that ain't helping inflation over there.