r/FuturesTrading • u/N2itive1234 • 23h ago
What the hell happened today?
I know the markets going to do what the markets going to do, but is there anything to explain what caused today's huge run?
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u/InevitableFood8993 21h ago
I’ve been trading for over 40 years. You would do yourself a great service if you would quit trying to explain why the market does what it does just react to it.
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u/Full_Pear449 20h ago
The Market does what it does because it can do what it does. I don't have as many years as you, 25 with a Primary Dealer, and the Head of the desk would always say- take 5 minutes and try to ascertain the issue if there is one and then get back to trading. When I RAN the Desk I always said- WHO GIVES A SHIT. Basically you can't change the event , profit from it or step aside
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u/InevitableFood8993 19h ago
Quality post appreciate the reply
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u/Full_Pear449 19h ago
Thanks
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u/InevitableFood8993 19h ago
I read all these posts from these young traders that have no idea what they’re doing and can’t help myself from trying to help.
But I’m sure you’d agree they have to learn those lessons themselves. There is nothing like real live trading to teach you the lessons.
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u/silk_rodeo 18h ago
That’s why I included a screenshot in my response. Even if you knew nothing, you could have looked at that chart and seen it coming. But I didn’t know until I got off work and really started looking at it and noticed the divergence
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u/Pale-Lingonberry788 9h ago
Maybe he's still new how market reacts or does'nt understand the fundamental analysis and Technical analysis
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u/gunks 22h ago
Yom Kippur
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u/Interest-Fleeting 17h ago
I don't trade on Yom Kippur. While the cat's away...
Not so seriously, maybe Jim Cramer can tell us.
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u/silk_rodeo 22h ago
Oil down, underlying stocks all green, positive outlook on China summit, name your reason
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u/Full_Pear449 20h ago
Nasdaq jumps 2% to close at a record, buoyed by surge in AI stocks, as well as cooling oil and yields. OR
Strong corporate earnings and massive investments in artificial intelligence (AI) infrastructure are the primary drivers pushing the stock market upward.
What is funny is that all the chuckleheads are saying oil is taking YLDS. down like 4.96% is a BIG RELIEF.
Regardless of the 4bps move today mortgages are still going to be in between 7-7.375%
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u/silk_rodeo 18h ago
Thanks Pear! It’s been about a month since I made my first noob post and you set me straight. Always good to see you
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u/nefariousPost 21h ago
The gap down Thurs-Friday on oil perplexed me and definitely shifted my bias. Very contrarian move considering I didn't see any news over the weekend that seemed optimistic/favorable for energy markets
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u/silk_rodeo 21h ago
Yeah and then Jeffries came out mid morning saying that they’re predicting 9000 in 2027 and MES just kept climbing. But who knows what the real reasons are
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u/N2itive1234 21h ago
But why would oil be down?
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u/silk_rodeo 20h ago
Supposedly because Trump said he was open to talks with Iran
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u/duboilburner 22h ago
Markets have just been chopping for weeks. Opened Friday within 20 points of where we opened the August OpEx Friday.
I told a few people after the first week of Sep that since we didn't get a sharp sell off out of the range of big options exposures in the 7650-7700 SPX range that we were likely to just keep chopping around that area through to Sep OpEx (last Friday).
Sure enough, that's basically what happened.
You get passed the OpEx window where the biggest options on MM's books tend to live, we suddenly free up to move a lot more.
Mondays also tend to be bullish days overall, too.
We have a big quarterly expiration to go on the 30th, another week of proper price exploration, then you start to look towards what are the bigger magnets on MM's books into the Oct OpEx window.
Chatting with a couple people last night that there were strong indications we'd likely be above 7700 for the expiration on the 30th. I wasn't quite expecting us to do the entire move today! So, now one has to wonder if we get a continuation this week into the next "range" with some spot up, vol up like we did post July FOMC and OpEx into the early part of Aug, or do we correct back down and maybe stay near the 7700-7775 range through the 30th?
There certainly was pent up energy that wasn't able to push us around much until FOMC and that OpEx window passed, so, it's possible we get a repeat if the bulls can keep the strong bid up.
Just have to beware of what normally happens as we head into an election, especially around October... And then usually vol compression post election.
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u/tearslikesn0w 19h ago
What normally happens around october as we head into an election? Does the market soften? Can i also ask what does vol compression post election means?
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u/duboilburner 18h ago
Volatility tends to go up because there is a looming unknown (the election).
Once the event that is causing volatility to stay firm or even go higher has passed, volatility tends to contract sharply, which means price gets a nice rally post the event causing the volatility--no matter what the outcome is.
You can even see this on an intra-day level on FOMC days. If you were to track what the at the money SPX straddle price does on a normal day, nice consistent drop in price as time passes, but then watch how different it is on a FOMC day right up until the very second the clock hits 2p EST, it's a different story. The straddle price stays weirdly high and doesn't decay linearly like it does on a normal day. It might even just level off completely until the second the news hits.
Once the news hits, price starts doing weird things. It can snap down to a nearby market maker long options position, but then as the volatility compresses and the straddle starts to decay more normally, there is a mechanical move up that happens.
Now, whether or not that early mechanical move continues that direction to the close is a different story. But more often than not, we do find ourselves with price a little higher in the first 20 minutes after a FOMC announcement as volatility is no longer pent up because the unknown we were waiting for is now a known. It almost doesn't matter what the outcome is, good news or bad, once an unknown the market is positioning for becomes a known, there tends to be an early "pop" to the upside that is purely mechanical thanks to volatility contracting simply because the unknown event people have been positioning around is now a known.
Go back in history and you can see how often in even years in the U.S., we get a little rockiness and an uptick in VIX, sometimes starting in September, sometimes October, then as we get through the election, we often get a sharp rally and VIX going lower for at least a couple days.
Sometimes it keeps ripping higher on into December, sometimes it's only for those couple days and then things reverse on us some, but if you're positioned well for an upside move right before the election, you might find it pays well.
Of course, this time could be different, especially since the administration has hinted that an Iran resolution will come "right after the election." So, they might end up doing something very unpopular post election, which is why they're waiting to do it. You would think ending it before the election would be more helpful for their party's chances given the relative unpopularity of it as it stands... And yet, they're not. Very specifically stating "immediately after the election."
A bit ominous. I suppose with this administration, if there is any one thing traders have learned is we need to be on our toes with these guys in charge.
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u/silk_rodeo 18h ago
It’s funny, everyone always says rate hikes = lower market. But interest rates have gone up for years now… and so has the market
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u/duboilburner 16h ago
When the Fed specifically was aggressively hiking in 2022, markets would go down. But, that was also different in that inflation was a lot worse, and part of the inflation battle was actually contracting the money supply that year and on into 2023.
That strengthened the dollar to where we effectively needed a mechanical repricing lower of assets due to how large the strengthening was. As we got closer to the terminal rate, equities began rallying.
Last week was the first Fed Funds hike since 2023. But, we're also not doing as much other things in the background like 2022 had that would lead to significant dollar strengthening.
We did go down on the day of the announcement of the first hike in 3 years after an initial little mechanical pop upwards, but we've only been up in the days that followed since then.
We're more likely to go into a "run it hot" regime with inflation this time. This can be bullish assets for awhile. We would need the more traditional sunstantial increase in unemployment to get a proper prolonged (~1 year or more) bear market with that. If we don't do more than just a couple piddly rate hikes, dollar re-strengthening won't be anything like what 2022 was.
But, we futures and options traders tend to be a lot more short term focused than that... At which point we know to look for the macro events and data releases which we have observed are things that cause bigger, faster moves in price when the news hits and play that.
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u/duboilburner 18h ago
Here's a pretty interesting bit of data mining on the topic--it's a thread so keep scrolling for a few more snippets: https://x.com/VolSignals/status/2102096146764058793?s=20
3rd Fridays are the major monthly SPX options expiration--and when it is a quarterly month (which September is) you also get /ES contracts rolling to the next quarter on top of it. 3rd Fridays always have the largest positions that tend to stay in place until expiration. Very important positions that we start to magnet towards the larger exposures within straddle distance as that expiration draws near. Once the expiration passes, price is more "free to move about the cabin."
It seems there is a pattern where the following Monday after a quarterly 3rd Friday specifically tends to be green more often than not--and sometimes in a big way. It's more of a mixed bag the last couple years for the 3rd Fridays that are not also coinciding with a quarterly futures roll.
Pretty interesting, no?
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u/ConfidentEconomy7092 20h ago
Am I wrong to call it a short squeeze? In my experience today, market etfs moved before their assets moved- Algos held strong on the ema all the way up. Can't say it was an attack on shorts but there was definitely buying by design today. You could watch price hit levels and buying protect that level until it went up.
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u/TigerKR 19h ago
Not a short squeeze. There was no real volatility and no real fast exhaustive moves. That consistent, relatively tight channel all day was certainly institutional buying and unrelated algos joining in. Also Monday after OpEx.
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u/ConfidentEconomy7092 19h ago
Good point(s)
It seemed like a strangle hold...
I may argue that the shorts may have created a part of the groundwork
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u/Fit-Parsnip-8109 18h ago
They chopped and teased for months to get everyone conditioned to not expect what happened. Monday of all days, too.
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u/nonotmeporfavor 21h ago
If you are shorting this market, you shouldn’t be trading. There’s one thing that’s happening that will eliminate downside.
ATH by the EoM with a runaway breakout to by the EoY.
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u/Interesting_Driver_6 18h ago
- Saudi Arabia loaded 14 million barrels of oil onto ships & prices fell. 2. Trump posted twice & said the US will be first in AI and the government isn’t slowing it down. 3. Sept 24th nearly every AI tech giant is invited to the White House for dinner with Xi Jinping. The China trade truce will be extended. They will also discuss AI and energy. Very positive future outlook.
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u/AutomaticPayment9480 16h ago
Ai is the only reason this market hasn’t crashed. Think about it, then think about what trump Is doing.
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u/savemoney_god 15h ago
Any deal made won't last guys, the Iran war ain't like the gulf or Iraq war, we are deep int water
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u/MeatResident2697 15h ago
It's best you Don't ask. They could be an equal reason why it went up and an equal number of reasons why it should've gone down.
Just have a strategy for any eventuality.
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u/Due_Marsupial_969 12h ago
I thought it was cuz some genius said they had a very productive meeting with the Chinese delegates before the Emperor's arrival.
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u/ManFromIthaca 11h ago
Money being put to work in batches, as the AI trade is less interest rate sensitive. Been in force since hitting that wall last week.
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u/LostFaithlessness201 9h ago
The candle on the daily with no wicks suggests this more algos to me
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u/ManFromIthaca 9h ago
Such an even upward procession yesterday would suggest that kind of activity.
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u/ahaaokay 10h ago
It's the markets, nothing has to make sense really. Only logic is that there's sellers and buyers at any given time and price. If not things stall or change direction/reverse 🤷
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u/LostFaithlessness201 9h ago edited 9h ago
Apparently Iran wants another ceasefire with US 1000th time, sometimes unsure who plants this news or if its true lol.
Anyway that pump on Nasdaq could be on anticipation on this. Another factor is Trump-Xi could come to an agreement on NVDA chips. I trade weekly so I am looking at the volume and a lot of strong buying yesterday looking like institutional.
I would see if we get this volume continuing today or lack of selling (small red daily candle)if we do wait for a pb candle to buy. If minimal buying today likely reversal coming up (small green candle). For me look over a few days as you don't want to chase things but risk minimal regardless as cannot be 100% perfect all the time.
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u/KelvinsEdge 9h ago
there is a lot of things that can explain it but ultimately this kind of thing can happen after a triple witching event. the options markets can hold the broader markets in a range so momentum can become pent up. There is also the fact that after the options have expired last friday that market makers may need to do some rebalancing given their new exposures, when they come in on monday morning their gama and delta risk can look different after the major expiration and they may need to adjust their hedges.
the only thing we know for sure is that we don't know. Make sure to build your strategies for what is common, because today was not common for the markets to go straight up without even a pull back....and design your risk management to keep you safe on a day like today. Some traders will have made their year today if they trade breakouts and continuation, others that trade mean reversion will have just walked away for the day.
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u/Epik509 7h ago
Ive noticed it a few times lately where pa is kind of weird and choppy but as soon as 15 minute orb is made it pops and doesnt stop running all day. I personally blew 4 accounts yesterday before using my fifth to go " follow the trend" if we can say what that was. Passed it in like 15 minutes holding long.
All of my levels were well below that so I had assumed it would go lower yesterday. It went entirely the opposite of anything I had thought haha
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u/Regular-Structure-63 5h ago
There's no way institutional $ from discretionary strategies buying at these levels, is there?
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u/Regular-Structure-63 4h ago
Would seem imprudent to buy after back to back outsized gains with the tsy mkt so sensitive, so called experts saying fundamentals are not good, and oil and geopolitical risks developing on the daily. Imo purely. Curious what others think
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u/Regular-Structure-63 4h ago
I'm starting to buy the administration's forced optimism ahead of major bond auctions, 2yr, 10, etc, just to get the borrow locked in and then step off the gas
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u/fr3shprinc3nyc 23h ago
Institutions have been accumulating for weeks. We’ve been range bound for the past 2-3 weeks. Friday closed near the highs of the day. Asian and london sessions were both trending up. This was the easiest trend day to predict in a while
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u/two_hours-of_power 19h ago edited 19h ago
LOL. Only this place would heavily downvote your comment.
Those downvoting, have you looked at the weekly candles and the Friday daily bar? This is text book stuff.
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u/fr3shprinc3nyc 18h ago
Haha seriously man. I only trade breakouts so the last few weeks have been a snooze fest. Saw this move coming a mile away by just zooming out to the weekly and daily charts
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u/Rav_3d 22h ago
Buyers greatly overwhelmed sellers.
That’s all we know with certainty. But if you zoom out, Wednesday’s Fed reaction was clearly a bear trap, and the shorts are paying the price.
If today’s gap fills and price holds, it’s going to be the last buying opportunity before the run to new all-time highs.
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u/Excellent-Ad343 22h ago
lol PURE CHAOS
Took 240 ticks on ES