Billions in Bond Auctions – Market’s Midterm Exams?

[] [The daily rundown of everything happening at Option Pit.]( [.]( MARK-et Open Hey OP Crew, Griff here with the Chart of the Day. Not much follow through after last week's explosive rally in stocks and bonds. The market will be tested this week with $112 billion in bond auctions – 3yr (tomorrow), 10yr (Wednesday) and 30yr US Treasury (Thursday) auctions. The iShares 25+ maturity Treasury Bond ETF (Ticker: TLT) opened on a gap lower today, so we may see some volatility as we head into the massive supply. [ The auction deadline is 1 p.m. ET, and the most important results to watch for are the bid to cover ratio vs the average and where the rate awarded to investors in the auction versus where they were trading at 1 p.m. in the secondary market. Let's Go! Bill Griffo [ Want to find YOUR winning fit? Give our Customer Care Team a call at 1-888-8772-3301 Monday-Friday from 9 a.m.-5 p.m. EST. Or email them anytime at [support@optionpit.com](mailto:support@optionpit.com?subject=) Trader's Edge: Last week was massive for the S&P. Will it continue? Weekly Look-Ahead: Earnings watchlist, S&P and QQQ levels, bonds and trades from across OptionPit In this week’s Look-Ahead, we’ll check out: - Stock watchlist focusing on companies reporting earnings - Major levels for the S&P 500 and the Nasdaq 100 - Circle back on what we covered last week with Bonds - Insight into trades across OptionPit [Get the watchlist and more right here]( Your Only Option, Mark Sebastian Pit Report: This week during our Trade Highlight Show, we covered MOS. We each gave our thoughts on the ticker last week in this newsletter, and we held a live roundtable show this morning to come up with an actionable trade for you. Trade Recap: 1 MOS Mar24 27.5 P/37.5 C ss for 2.50 top. 1 SVIX Dec15 31 c 1.45 [Click here to watch the full show.]( [To see the live show every Monday at 10:30, just sign up for any paid service here at Option Pit](... or call (888) 872 3301. Power Income: Last week’s trade was a change changer for the trade strategy to deploy in the weeks ahead … The key events driving change were … - Janet Yellen injecting $14bn into the bond market. - Powell not showing the hawkishness of past meetings - The bond market putting in a major top in rates/low in prices, which fuels higher valuations for growth stocks and the potential for greater growth and inflation ahead. - The Dollar breaking down, which is also a positive for growth and inflation in the months ahead. These moves are all market positive and if we look back to October of 2022 when very similar changes occurred … we can gain insight into where the most money will be made … Today, I’ll share data that will help you maximize your trading profits … Oct ’22 Revisited As you can see below after the UK bond crisis the Treasury (Janet Yellen) .. began a 6-month period of consistent injection of liquidity into the markets that fueled: - A major down-trend in the US Dollar (USD) and Bond Yields - Major rallies in Energy first - Gold next followed by - Stocks [5).png] Even before the Fed meeting this trended began, which most likely was fueled by Yellen’s $14bn injection. The important note is that these trends are purely liquidity driven, which means they build a more solid ground under inflation and ultimately the bear market in stocks will return. Positive Gamma reflects positive option flow as investors now roll call open interest to higher strikes … You can see this in the trend of the SpotGamma gamma index that monitors changes in open interest on a daily basis … [6).png] The index goes from -4 to +4 at the extremes and above +3 would be an area to begin fading the SPX rally … Follow Power Income for updates … I would expect a test of 4400, which is the highest net positive gamma strike (Call Wall) this week … Above 4400 is the first area to fade the rally for a short term trade … However, as long as the index is positive we are in a decreasing volatility regime, which is a tail wind for stock prices … Check out how large the 4400 strike has become, making it a mean reversion target if a break above occurs without large investor rolling to even higher strikes … [4).png] Stay-tuned for updates at Optionpit.com and the Power Income free newsletter. If you are interested in exclusive access to all the trades I execute for my trading community … plus learn how to utilize real-time option flow analysis to increase your probability of success … Call our Customer Care team at 888-872-3307 now for a special deal. Live and Trade With Passion My Friends, Bill Griffo Power Moves: The International Energy Agency predicts that global demand for fossil fuels could peak by 2030. The group also expects renewables to make up nearly 50% of global electricity in 2030. Today, renewables account for about 30%, with the majority of that being provided by nuclear power. The White House wants to accelerate that push. The Biden Administration is finalizing plans for four new “wind energy areas” where it can auction off the right to set up offshore wind power. The administration claims the areas will produce enough electricity to power as many as 3.23 million homes. They are going to hold auctions despite lease sales in August resulting in just bidding on one of three available tracts. At the same time the EPA is removing federal protections for a majority of the country's wetlands. The decision follows a ruling by the Supreme Court that narrows the scope of the Clean Water Act and the agency's power to regulate waterways and wetlands. Could that be a back door to increase wind power? The administration is also clamping down on fossil fuels. It confirmed it will kill seven Alaskan oil and gas drilling leases issued under the Trump administration. Interior Secretary Deb Haaland also proposed a rule to protect 13 million acres in the National Petroleum Reserve. At the same time, 81 democrats want the administration to set more stringent emissions restrictions on heavy-duty vehicles. It is, of course, hard to please everyone. The White House’s move to ease sanctions on Venezuelan oil did not sit well with many. Some on the Hill believe that we should not be supporting dirty production in countries run by totalitarian regimes while limiting domestic production. Global Push It is not just the U.S. Members of the Group of 20, the world's largest economies, want to triple global renewable energy capacity by 2030. Specifically, they want to accelerate “efforts towards phasedown of unabated coal power." President Biden attributed that to other countries wanting to follow his Inflation Reduction Act playbook. Darkness on the Edge of Renewables All is not bright in the renewables space. EV sales have slowed. So much so that Ford (Ticker: F) is postponing $12 billion in planned spending on electric-vehicle production. General Motors (Ticker: GM) postponed retrofitting a $4B factory to scale construction of its new electric pickups. The main issue is that they cost too much. People don’t want to pay $43K for a vehicle with 312 miles of range, which is why 50% of US adults don’t see themselves as likely EV buyers. High rates and low demand are also impacting renewables. And SolarEdge Technologies (Ticker: SEDG) said that the solar industry experienced “substantial unexpected cancellations and pushouts of existing backlog” in Europe. Its third -quarter sales forecasts are well below previous expectations. SEDG’s stock took a hit that spread to other solar stocks, including Enphase Energy (Ticker: ENPH) and First Solar (Ticker: FSLR). Green utility giant NextEra Energy (Ticker: NEE) and wind turbine manufacturer Siemens Energy (Ticker: SMEGF) are both down nearly 40%. What is the Future? The administration is turning towards hydrogen. It awarded $7B to build a network of seven hydrogen “hubs” across the U.S. Biden expects the project to bring $40B+ in private investments, creating tens of thousands of jobs. Companies showing interest include British Petroleum (Ticker: BP) and utility giant NextEra (Ticker: NEE). One that has struggled but is still in the fight is hydrogen fuel cell developer Plug Power (Ticker: PLUG). I always like to consider big oil when talking green energy. Cutting Through the Noise for You, Frank Gregory AG's Views: UVIX Down Almost $20 in a Week From the desk of Option Pit Director of Education Andrew Giovinazzi I put on the Volatility Shares 2x VIX Future ETF (Ticker: UVIX) pair with a SPDR S&P 500 SPDR S&P 500 Trust ETF (Ticker: SPY) put spread about 30 days ago, only to see the biggest vol spike in 6 months on the Hamas invasion into Israel at the beginning of the month. [ UVIX owned the futures up 2x and is now getting decimated, on the way down with the product making fresh lows today around 25.07. The leverage inside of UVIX makes it susceptible to big downdrafts. I got to .25 away from my entry price. If I get green on them I can see rolling down to the UVIX Dec15 20 puts. This time, I will keep my SPY put spreads a little longer. A sideways market is bad for UVIX. The futures it owns will just rot the product away. This week is looking like a sideways week, so we could exit. - AG OPTION PIT GLOSSARY [( There are plenty of terms in the trading world that need defining. The [Option Pit Glossary]( is here to help. Today's phrase is: Futures: A financial instrument that prices a commodity or index further out in time. Futures delivery can be in the physical commodity or cash. [( DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. 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