September 15, 2021

Markets:

Stock futures ticked up Wednesday morning to steady after dropping a day earlier, as September selling pressure returned to markets. New tepid economic data out of China also added to concerns over the pace of global growth.

Key economic data out of China pointed to a much sharper-than-expected deceleration in growth last month, suggesting the recovery in the world's second-largest economy was losing steam at a faster rate than expected. And elsewhere, shares of casinos with operations in Macau like Wynn Resorts (WYNN) and Las Vegas Sands (LVS) slid after the government announced plans to increase regulatory oversight of the gambling industry.

The stock market is repeating a pattern of midmonth stumbles some analysts tie to options expiration. That dynamic could be amplified this week ahead of “quadruple witching,” the simultaneous expiration Friday of individual stock options, stock-index options, stock-index futures and single-stock futures.

The Labor Department's consumer price index (CPI), excluding volatile food and energy prices, ticked up by just 0.1% in August compared to July, posting its slowest monthly gain since February. Core CPI also rose less than expected over last year, the latest report released Tuesday showed. 

Portfolio:

We enter today's session holding positions OXY, SDC, FIGS, SKIN, RRC, and ITRM. We booked a beauty with TMC yesterday, a quick trade.   

The noise is becoming louder as many are calling for a correction…the same correction they've been trying to call since last summer and have missed one of the greatest rallies in market history.  We repeat, limit the noise and follow the market trend until it breaks!

Almost like clockwork, over the past six months the S&P 500 has fallen in the week leading into OpEx, so the risk is we see this flow repeat and come into play this week, which could mean weakness into Friday’s expiry although perhaps it’s all too obvious now.  We didn't expect the push / pull pattern the last 3 sessions.  But we continue to monitor the Cboe Volatility Index VIX and it has struggled to break above its long-term average near 20.  This is important, especially where ES sits on its daily which is right on the 50.  

It's now being reported that this Friday's quad witching day is the 2nd largest expiration for single stocks outside of a January.  This is monstrous, and to us, unexpected coming off summer time.  We continue to follow our trend lines, but everything is now in place for a monster rip higher after this event.  We could break and if we do, we have so much room to trade it.  There is no point in front running a move.  To us, you could see a monster chase / push higher once folks realize there is no "correction" occurring here and now need to cover.  This, however, will provide monster opportunity.  We patiently wait for it.  Let's have a great session and be ready today.