Macro Theme:

 

 

Founder’s Note:

Futures are +40bps higher as we turn to Nov OPEX week.

Key “Trump Trade” “memes” are ripping, which is generally bullish for equities as it exhibits “risk on”.

• TSLA: +6.8% premarket to 340
• PLTR: +3.4% premarket to 60
• Bitcoin: 82,250 +8% (since Friday’s Equity close)
• Dogecoin: 0.28 +45%

We state memes as much of what is happening now is FOMO speculating (& chasing) vs investing for future policy changes. But, as the famous Soros quote goes: “When I see a bubble forming, I rush to buy, adding fuel to the fire.” “Meme” is just the new term for “bubble”, and that process seems to be underway for the likes of Trump-Trade memes.

For today we start with a material amount of positive gamma, and that positive gamma likely stays in place through Friday’s OPEX. With that 6,000, an absolute beast of a gamma-strike, should be a key level into Friday. This means 6k is support for today, but also a possible support/pinning level into Friday. We also see large positions starting to build up at 6,050, which is our current overhead target level and major resistance for today.

As you can see below in TRACE, there is a healthy set of positive dealer gamma positions from 5,900-6,000, which implies support to the downside.

In a normal equity environment we’d think the SPX would have to digest this 6,000-6,050 level for several sessions (i.e. it would be the key range for this week). We still lean this way, but we’re not “all in” on this view this week because of the Trump-FOMO.

As we discussed on Wednesday, post-election the equity market is/was likely under a process of having to reprice and therefore reposition for higher equity prices. With that, major equity indices are ~4% since from Election Day and through the benign FOMC.

For the SPX & NDX, ~40bps of those ~4% gains are due to TSLA, alone.

This idea of a single stock turbo-charging equity gains is nothing new to SpotGamma Members – its the NVDA playbook (see here). The critical difference here is that NVDA is +5% of the SPX/NDX. vs 1.6% for TSLA.

Below we’ve plotted several sector ETF’s, along with major indices, and Trump Memes. You can see that most equity-assets are broadly higher since the election, but a much more reasonable +0-2% range.

The 1H ’24 move for NVDA and its offspring (i.e. all semi stocks) was a manifestation of the AI trade, whereas TSLA is the avatar of the Trump Trade. The “Trump Trade” is a tailwind for equities, with TSLA being the prime benefactor of that movement.

If TSLA continues on its torrid trajectory, its likely going to drag equity indexes higher – which the positive gamma regime can “resist”, but maybe not “defeat” (unless other major stocks, of course, reverse).