SP500 LDN TRADING UPDATE 19/02/25
WEEKLY BULL BEAR ZONE 6060/70
WEEKLY RANGE RES 6204 SUP 6061
DAILY BULL BEAR ZONE 6100/10
DAILY RANGE RES 6186 SUP 6102
Options Expiration (OPEX) on February 21 – Volatility Risk
The positioning of 6,200 call options on SPX indicates a level of resistance, while the positioning of 6,000 put options could provide support in the event of a pullback. Anticipate heightened volatility as we approach OPEX, with the possibility of abrupt movements prior to a repositioning.
***FYI I WILL BE OFFLINE FROM 20TH NY CLOSE TO LDN OPEN 25TH***
TODAY'S TRADE LEVELS & TARGETS
LONG ON TEST/REJECT DAILY BULL BEAR ZONE TARGET DAILY/WEEKLY RANGE RES
LONG ON ACCEPTANCE ABOVE 6163 TARGET DAILY/WEEK RANGE RES
SHORT ON TEST/REJECT DAILY RANGE RES TARGET DAILY BULL BEAR ZONE
YOU CAN REVIEW WEEKLY ACTION AREAS & PRICE OBJECTIVE VIDEO HERE
GOLDMAN SACHS TRADING DESK VIEWS
U.S. EQUITIES UPDATE: TRADING FATIGUE
FICC and Equities | February 18, 2025
Market Performance
S&P 500: +24bps, closed at 6129 with a Market-On-Close (MOC) sell imbalance of $500mm.
NASDAQ 100 (NDX): +23bps, ended at 22164.
Russell 2000 (R2K): +45bps, finished at 2290.
Dow Jones: +2bps, closed at 44556.
Total trading volume: 15.59bn shares across all U.S. equity exchanges, slightly below the YTD daily average of 16bn.
VIX: -13bps, settled at 15.35.
Key commodities and assets: Crude +151bps ($71.81), Gold +128bps ($2933), U.S. 10-Year Treasury yield +7bps (4.55%), DXY +44bps (107.05), Bitcoin -131bps (95175).
Market Dynamics
Equities traded in a choppy manner amid relatively light news flow, with the primary headline being U.S. and Russian officials meeting in Saudi Arabia to discuss ending the war in Ukraine. Retail-driven trading activity persisted under the surface:
High Beta 12M Losers: +2%.
China-Exposed Stocks: +1%.
Most Shorted Stocks: +44bps.
The S&P Equal Weight Index outperformed the SPX by 50bps.
Key moves included a short squeeze in Intel (+15%) on speculation of a potential breakup involving TSM (-50bps) and AVGO (-1.7%). Meanwhile, META, NFLX, AAPL, RDDT, and SPOT saw declines, driven by crowded long positioning and reversion dynamics, with META breaking a 20-day winning streak (-4%).
Total market volumes were +11% vs. the 20-day moving average, though excess activity appeared largely retail-driven, notably in names like SMCI and NVDA.
Broader Market Concerns
The S&P 500’s upward trajectory faces challenges:
Extremely narrow 52-week breadth.
Equity market concentration at 100-year highs.
Uncertainty at 30-year highs.
Elevated valuations relative to historical norms.
Gross and net leverage in the 100th and 94th percentiles (3-year lookback).
Trade policy risks remain a looming factor.
Sector and Flow Insights
Materials Demand: Hedge funds (HFs) and long-only (L/O) investors showed strong interest in materials, which was one of the most net-bought U.S. sectors last week. Notional net buying in materials was the second largest on record (trailing only the meme stock rally in January 2021). Gross/Net exposures for the sector are at 3.0%/3.2%, ranking in the 24th/20th percentiles (1-year) and 10th/5th percentiles (5-year).
Flow Summary:
Overall executed flow: +174bps vs. +138bps 30-day average.
Long-only investors: Net buyers (+$200mm), with demand across all sectors except healthcare, macro products, and tech. Materials led buying, followed by financials, discretionary, and communication services.
Hedge funds: Net sellers (-$800mm), driven by supply in tech, macro products, and consumer sectors (both staples and discretionary).
Activity Levels
Trading activity was moderate, rated a 5 on a scale of 1-10. ETF volumes accounted for 34% of total trading, higher than the YTD average of 29%. Liquidity and bid-ask spreads remain healthy, both in the >80th percentile on a 1-year lookback.
Derivatives Market
Gamma remains a key focus, with dealers long ~$7bn of S&P gamma. This exposure becomes shorter on downside moves and longer on a 1% upside move. The SPX closed up 24bps, with slight increases in volatility and skew selling, particularly at the front end. ARKG saw significant call activity, with 81k calls traded versus a 20-day average of 8.6k, marking a record high. The Friday PM straddle is priced at 0.76%.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!