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%.