Good Morning!

• Another interesting aspect of inflation comes from money manager surveys wherein a large percentage of money managers still believe inflation is transitory.
• They are being dragged screaming and kicking into the idea that inflation is sticky and the Fed will get aggressive to stop it.
• In other words, sticky inflation is still not fully priced into markets, despite what the interest rate markets say.
• And so, the debate will continue until inflation is fully priced into the markets.
• And it’s also why Wall Street’s biggest bear, and the author of the monthly Fund Manager Survey, Michael Hartnett, writes that “we remain in “sell-the-rally” camp as the January – February sell-off was the appetizer not the main course of ’22.”
• Yesterday’s put buying increases volatility today. Fully 50% of the SPX, SPY, and QQQ Gamma expires between weekly and monthly expiration tomorrow. 
• With all the put buying yesterday, we forecast a plus or minus 68-point range from the Open. That is a full 120-point playground for the day.
• Support is at 4400, then 4375, with resistance at 4420, then 4450.
• With volatility elevated from earlier this month,  traders are unlikely to carry many short-dated puts over these next few days and into the long weekend. 
• Therefore very short-dated volatility will likely come for sale (plus the back-to-back expirations). Selling the volatility drives Vanna.

• The Vanna tailwinds should give us a bullish edge into tomorrow’s expirations, but we think this Put interest removal takes away some market support for next week, particularly Monday.

•  Subscriber charts are up.

Be careful today!

A.F. Thornton