With today's huge opex draining most of dealer gamma and unlocking the "gamma gravity" that had locked markets in an upward vise for the past two weeks, and the momentum trade starting to crack, there's plenty of things to pay attention to today. To help readers, here is a summary of the 12 key things the Goldman trading desk is looking at today, courtesy of trader Michael Nocerino:
1. US DESK ACTIVITY: Overall executed flow on the Goldman desk ended with a -114bps sell skew vs 30d avg of -42bps. LOs finished +4% net buyers, driven by demand in Financials, HC, and pockets of tech vs supply in macro products. HFs finished -2.8% net sellers, driven by supply (short > long) in macro products and Energy. It was a particularly squeezy tape in HC yday with outsized performance in less owned/shorted names (CRSP most asked, WBA, BMY, MRNA too), likely marginally benefiting from mega caps weaker on GOOGL -2% re: the Information article ‘OpenAI Develops Web Search Product in Challenge to Google'.
2. SETUP: LO’s cash levels are still too elevated (plenty of dry powder), our PB data shows overall L/S Ratio at 1.74 (13th percentile vs 5 yr look back), Corporates are putting up a record February in terms of authorization and purchases. ARM and Bitcoin explosions appear to have woken up the yolo/meme retail trading community. Metrics showing their footprint has been heavy MTD. Our Retail Favorites Basket (GSXURFAV) +10% ytd has doubled up S&P’s ytd mark. LO Cash + Corps Active + Retail Engaged = Hard Market for the Bears.
