The “Softbank Squeeze” is being talked about all around Wall Street this morning/past weekend.  Some very uncouth behavior on the part of the Japanese Bank over the past couple of weeks, where it’s being reported that levered up on $30B notional! is call options with high deltas (at or close to the money option trades), that created a massive gamma squeeze in FAANG stocks and the NASDAQ Index – hence the strange trading activity over the last 2 weeks where overall market breadth was very weak, but mega tech stocks were through the moon, so to speak. Nobody had the “cojones” to take the other side of the trade, until now, as the tied washes out exposing Softbank. Complete and utter market tomfoolery and manipulation.  

Global Equities:
US and Europe down big overnight – GER -1.68% FRA -2.16%, SP500 -1.3%, NASDAQ -3.00%

Shanghai Index +0.70%

VIX on the wrong side of 30.00, VXN on the wrong side of 40! this morning (probably most important).  I’d say makes it a little more difficult for “Mr. Bull Market Genius” to manage his portfolio this morning.  Risk happens slowly, then all at once.

Energy, and Metals are correcting this morning to the low end of their respective trading ranges.  The commodity reflation trade is not over in our assessment – this should be viewed as an opportunity. 

Crude Oil -15% w/w,

Copper -1.3% this morning,

Gold -0.43% (briefly testing the low end of our range this morning),

Coffee, Cocoa, Sugar -4.00%, -2.20%, -0.14% respectively since Friday.

All opportunities this morning.

US dollar is catching a bid +0.61% which I’d imagine won’t be viewed too friendly by Jerome Powell and his FOMC constituents. 

I’ve got to keep it tight this morning, with the onslaught of activity.  Back soon.

800-669-5354312-373-5286Series 3 Licensed

John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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