Macro Theme:

¿Key dates ahead:

Founder’s Note:

Futures are +20bps. JOLTS is at 10AM ET.

The only major level on the board is 6,390, which is key support on the day. That support level comes against the market pricing essentially no movement: 0DTE straddle is $18.6/IV 11.3% – thats just 29 bps of movement. The sad thing is that, while you don’t want to short that, we can’t really make a case to buy it, either.

Tomorrow is FOMC & GDP, so some short term movement should kick in. If the market is happy with Powells comments, then we likely see the VIX start to sniff 12-13, which likely boosts the S&P500 to 6,500 into early next week, then its “full zombie” into Aug OPEX. This is currently our base case.

Of course with IV’s in the gutter, if Powell upsets markets they we would expect some violet downside action as the SPX is priced to no-volatility perfection. This is why we like owning a sliver of puts/VIX calls over this next week (FOMC, GDP, NFP, etc).

As we discussed yesterday AM, this somewhat forces us all to go to the single stock space for action. SMH was discussed as our favorite long due to cheap IV’s and SMCI was +10% yesterday (8/5 ER), AMD + 4%.

Another interesting trade today may be NVO (Novo), which is -18% to $55 pre-market – likely offering up some spicy vols. Further, if you look at your Total OI model you see there are essentially no positions <=55, which signals a lack of hedging pressure down below. Often times this corresponds with short term lows in a stock.