evening wrap

market vibes

October 21 …) 

Precious metals drove to new highs early in the NY session then dipped modestly and meandered around Friday's late afternoon best levels. Gold notched another all-time high. Oil sipped a teaspoon of juice from the relentless gratuitous killing in the middle east but don’t worry the oil fields are off limits.  

The dollar continued its freakish rally that absolutely no one saw coming, driving gold to new all-time highs, a bizarre dynamic that no one saw coming.  

Turning to silver, Friday’s expiration squeeze may see a re-do next month. The November 15 calls from 30 to 38 total about 60 million shares already, and December’s slate is similarly porcine. Plenty of gamma.  

However, Friday's rally was unique because it was more of an expiration squeeze than a gamma squeeze. The shorts HAD to buy SLV or be short shares at settlement when calls were exercised. Or roll. The reality is at expiry someone has to come up with (or create) the shares which draws silver from somewhere.  

If any inflationistas care, soybeans rallied .10 cents to settle $9.80 / bushel, nearly a dollar below their nominal highs in 1977.  

The dynamic in long bonds is teachable. OI is very high and not liquidating as prices fall. This means the short is not covering … not contributing any buy side liquidity to the daily auction. Therefore, seller must lower their offers to attract new longs or bargain hunters who lose money and sell to other new longs at lower prices concentrically until the imbalance clears.  

This is a classic example of trend.  

In stocks… major indexes did nothing; glued to the latest ATH passing another stunningly dead day. The S& P midcap 400, which has been independently firm for weeks fell a bit more than 1% closing below its July 31 post FOMC high.  

Nothing happening in oil, flat price is an apt moniker. Spread and cracks were flatlined. 

My vibe 

A short note for a dull day. Going to walk the dog. Just for fun…I’ll leave with a letter from John Steinbeck that hit my inbox from a friend last week. 

Good luck in Asia

JJ

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Charts and data CQG and Bloomberg  

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