Head Of JPM Cash Trading: I Currently Have Zero Sell-Short Orders, I Have 5 Chunky HF Orders, All Buyers

Head Of JPM Cash Trading: I Currently Have Zero Sell-Short Orders, I Have 5 Chunky HF Orders, All Buyers

Spoos have slumped since hitting the 200DMA resistance last week, sliding almost 200 points from the closely watched 4,328 level, but despite the widespread selling – sparked in part by the latest popping of the meme stonk bubble courtesy of Ryan Cohen’s masterful pump and dump – the mood is anything but panicky, with some actually expecting that the bigger the selloff now, the less hawkish Powell’s remarks will be on Friday morning at Jackson Hole, and the faster the bounce. 

In any case, and as is abundantly clear by now, JPM trader Andrew Tyler writes this morning that the market’s primary focus is Friday’s Jackson Hole event featuring Powell’s speech, and several media outlets are reporting that HFs are positioning for a more hawkish speech, with Powell pushing back on the concept of a pivot. While this is aligned with JPM’s thinking, given that the Fed is waiting on the Sept 2 NFP and the Sept 13 CPI prints, which should dictate 50bps or 75bps, it is unclear why this is “new news” as this was the Fed’s stance since the July meeting.

That said, any talk of a pivot will be reserved until the Sept 21 Fed meeting, and as a result rate vol is likely to remain elevated around these near-term macro events, with September a seasonally weak month for stocks.

Elevated rates vol can also negatively impact both credit spreads and Equities, more generally, according to Tyler.

Which brings us to the latest market comments from JPM’s Matt Reiner, head of cast trading, who reveals that – if anything – funds were taking advantage of the Monday rout to load up.

Remarkably, High-Touch is almost perfectly balanced Buy vs Sell (1.02x) through the first 90 minutes of trading. Industrials are way better to buy, and Tech is way better for sale. Things feel oddly harmonious, even as we drip lower in an ugly fashion. Wonder if this bleed ends at the EMEA close… Volumes are tracking up 12% vs the 5dma, but it feels quieter than that.

While we saw a flurry of short selling right after the open, a lot of the noise around that has dissipated, and I’m feeling mildly optimistic that the bulk of the trades are ‘short-term-rentals’ in nature, not truly high conviction – I agree, the macro backdrop has deteriorated since the latest EMEA CPI’s, but I have to remind myself that the US is in a slightly different situation than Europe.

While it’s hard to imagine a world where Europe has an inflation rate of +10% AND the US inflation rate drops below 6%, it certainly is possible given our energy & agricultural independence (However, I’m sure there are historians that would argue my naiveté on this).

Things of note on my pad: Very few people are asking questions on single stock weakness today (likely feeling relief). I currently have zero Sell-Short orders working. I have taken 5 chunky HF indications today, ALL buyers, ALL dedicated’ s. ETF’s are lopsided to buy. I haven’t felt a single moment of panic.

Much more in the full note available to pro subs.

Tyler Durden
Tue, 08/23/2022 – 13:40

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