Market Prep: Geopolitcal Risks & Sector flow
Hello Traders,
The 3% spike in WTI today confirms that the 'geopolitical premium' has returned with a vengeance. Despite the 'mildly optimistic' tone of the latest negotiations, the massive US military buildup in the Middle East suggests this is a high-stakes poker game where neither side is ready to fold. Our scanner has been sniffing this out all week with ITA 0.00%↑ call open interest, showing that the market is increasingly positioning for a 'no-deal' scenario or, at the very least, a protracted period of armed tension. As of now, the update is that USA is ready to strike Iran as soon as this weekend.
VOLATILITY FADE
The market is catching a breath despite today’s geopotical news, macro data came in positive with better than expected industrial production. With the VIX fading back below our $22 line in the sand, the immediate pressure has lifted, making a relief bounce much more likely. But don’t mistake this for a clear runway—hedge funds are still holding onto their long-volatility positions.
VXX 0.00%↑ GEX remains skewed on calls vs puts.
This ‘hedged’ posture suggests the big players are bracing for more chop, reinforcing our view that we’re moving into a persistent range-bound market.
MOMENTUM FLOW
Our scanner has detected major shift in institutional demand flow for the following sector:
