on March 29, 2024

The Next Flash Crash…

Enjoy the long weekend

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Our View

I am not big on end-of-the-world forecasts. I thought Y2K was silly and anyone that believed it was nuts.

A friend of mine, Rob Bubble has been buying silver, guns, ammo, and boxes of dry rations for the last 3 years. I can ask him but last year he told me that on a certain day, the world was going to come to an end. That day passed and I reminded him a week later that we were still alive. Like anything in life, one never knows. One day you are fine and the next day you find out you have a life-threatening disease. Life is full of curveballs.

I am not writing any of this dreary stuff because the end of the world is coming, but JP Morgan’s chief stock strategist Dubravko Lakos-Bujas thinks it is and said in a webinar yesterday that a stock rally unwinding could come with no warning. He warned of a potential cascading ‘flash crash’ in stocks as everyone packs into the market’s most popular names. He went on to say “The concentration is so high that if one large fund begins pulling out, it could trigger a broad market fallout. Cracks are already showing as Apple and Tesla stocks slide.”

To me, that makes perfect sense but trust me on one thing: The next flash crash won’t end in 30 minutes like the one I lost $10 million in. Like I always say, no one knows for sure when the next flash crash is coming.

I think we will all agree on one thing, the markets can’t go up forever.

Our Lean

The markets are closed today for Good Friday and reopen Sunday night. The first few days of April are bullish and volumes should continue to be low. I will add one thing, the ES closed weak but most of the late buying and selling was tied to the rebalance. We will do a morning update on Monday. Have a great weekend and see you next week.

MiM and Daily Recap

ES Recap

The ES traded in a narrow range from 5301 to 5312.50 on total Globex volume of 206k and opened Thursday’s final trading session of Q1 at 5309.50.

After the open, the ES traded 5311.50 sold off down to 5305, rallied up to 5314.50, dropped back down to the 5308.75 level, popped back up to 5315.00, pulled back under the VWAP to a 5307.25 double bottom at 10:28 and then rallied up to a new high at 5316.25 at 11:34. From there, it pulled back to the VWAP at 5309.50 — that’s right, an 11.25 point trading range in the first 3 hours with most of it in a 3 to 5 point range.

After the high, the ES slid down to the 5305 level at 1:38, then after the low, the ES rallied up to 5318.75 at 3:04, dropped down to 5311.00, and then rallied back up to a lower high at 5321.00 at 3:31. From there, the ES dropped down to 5312.50 at 2:45 and traded 5313.50 as the 3:50 cash imbalance showed $527 million to buy and traded 5304.25 on the 4:00 cash close, down 4 points or -0.08%. The NQ settled at 18,465.00, down 38.75 points or -0.21%, the RTY settled at 2,145.20, up 6.80 points or +0.32%.

In the end, it was a long day of nothingness. In terms of the ES’s overall tone, it was a low volume, sideways-to-up chop all day. In terms of the ES’s overall trade, volume was on the low side: 207k traded on Globex and 1.189 million traded on the day session for a total of 1.396 million contracts traded.