VIX rose 30% from the bottom, while ES, NQ and megacap stocks saw rare big declines. There are always complex reasons why the market moves, but here are a few I think.

  1. ASML negative guidance
  2. Trump – Taiwan Remarks (related to TSMC)
  3. Trump – Remarks that there should be no interest rate cut until the November presidential election
  4. Rotation from megacap to smallcap
  5. OpEx

The Russell 2000 ended last week’s consolidation and posted its strongest rally in history. I expect that small caps, which have more variable debt than fixed debt, will continue to show good performance as expectations of interest rate cuts grow stronger and as the end of the year approaches. However, ES may see further downside/adjustment moves as the market currently appears to have shifted to a more neutral rather than bullish attitude toward risk assets.

I believe the bull market is not over. I will be watching to see if the megacaps get a bid in this corrective move and expect both megacaps and smallcaps to do well in the next upward phase.

Crypto markets showed a strong rebound from the lows and touched the mid-range. However, there was no clear yellow box breakout, and considering the movements of the overall risk asset market, it is believed that BTC will also be affected at least a little. I think BTC still looks good, but if it fails to show a quick upward movement or falls below the yellow line (63.5k), it may build a certain range and continue to trend sideways. BTC is showing a strong performance compared to the stock market, but whether this is a symbol of strength or a slow reaction will become clear as we wait a little longer.

There is a big event next week.

  1. GDP, PCE
  2. Trump’s speech at Bitcoin 2024 (I’m very excited to see what he will say…)

Atlanta Fed GDP Now shows the U.S. economy grew 2.7%, Control Group rose 0.9%, industrial production rose 1.6%… I think the US economy looks good and there is still no recession. At the current rate, it appears that this growth rate is likely to increase further in the second half of the year.

Everyone will be paying attention as there is a possibility that market conditions may change suddenly following Trump’s remarks on Bitcoin 2024. Currently at X, there are rumors that Trump is adopting BTC as a strategic asset, but nothing is certain about this. However, if Trump is serious about BTC, there is a possibility, even if not right now. I believe that Trump is sincere when he says, “We will make BTC and the crypto industry happen in the United States.”

IV is up 20 points this week on the back of positive spot-volatility correlation! However, continuous call option buying did not continue… RV has continued to fall since the 17th, and the current VRP is not a good situation for option buying. If BTC continues to move sideways within the range due to the influence of the stock market, IV is likely to undergo mean reversion here.

Special tape this week: December $100,000 call options x1250 (+ delta hedging)

NFA DYOR

<Source : TradingView, Ambardata, Atlanta Fed, Investing.com, KathyJones>

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