A Different Story Beneath the Surface

Volume 160 - The Week Ahead

Last week was one of those weeks where the headlines made more noise than the price did. Tech cracked, vol jumped, shorts spiked and the NDX finally lost its balance, liquidity vanished, and every conversation had that “is it over” energy to it. And yet when things settled, SPX finished the week just shy of two percent lower and still miles away from anything that resembles real damage. It wasn’t what happened that caught my attention. It was what didn’t.

This market had every excuse to break. Systematics sold into weakness all week, CTAs dumped billions of exposure, vol-control completed one of its largest one-month de-risking cycles of the year, dealers carried less gamma than at any point since summer, ETF volumes hit extremes, and liquidity across the S&P collapsed to levels that would normally trigger genuine disorder. Tech finally gave us an actual wobble where even the strongest names couldn’t shrug off the pressure. And despite all that, the index absorbed it and still closed with a green Friday.

The selling was dominated by short flow. Four-to-one ratio to long selling in some subsectors. Hedge funds trimmed gross but weren’t scrambling for the door. Software and semis took the brunt of the pain, but again, this was hedging and PnL protection. Non-profitable tech got torched for a third straight week, the kind of classic late-year purge that always feels bigger than it really is. Tech told the story better than anything else. NVIDIA put up another solid print, had every reason to ramp and still couldn’t bounce. Most of the megacaps that have carried the entire index all year, suddenly felt heavy in a way we haven’t seen since that brief red week mid summer. IMO this recent price action has not been euphoria unwinding. It’s positioning losing some conviction.

And this is exactly the kind of setup where thin holiday liquidity can turn what looked like a controlled wobble into something that actually matters. Thanksgiving week has a habit of exaggerating whatever the market is already hinting at. Small flows can become big moves very quickly.