Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

GEX Says “Hammertime”

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For those who don’t know, GEX stands for Gamma Exposure. It is an options-based LEADING indicator that is derived through a calculation of all the gamma at all strikes and expirations on any given day in the S&P500 Index. The chart is free to access and can be found here.

High Gamma = high pushback against selling and Low Gamma = low pushback against selling.

As of Friday’s close, Gamma Exposure hit a very low point. A key point in a couple of ways.

The first is that it was less than 1.5B. When gamma gets this low it tends to be associated with falling prices and increased volatility.

The second is that GEX broke its uptrend line. I’m the only one I know of that uses it this way. You see, a little while back, I was doing some ongoing testing and analysis of the GEX and noted that it seemed to trend along with the SPX. Out of curiosity, I drew some UTL’s and plotted what happened when they broke down. I was surprised and amazed at the results. It was consistent going all the way back to the start of the data in 2011. Red dots are when GEX is <1.5B (GEX above, SPX below).

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The Influence of Fed Balance Sheet Growth

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First off, thanks to The Lone Ranger for inspiring this post in the first place.

And now let’s begin…

Starting with the bird’s eye view, the chart below shows all available data on the FOMC’s operations going back to 2007 (for a more detailed explanation with chart of all the FOMC operations current to Apr 2020, check out this excellent post I found here).

Except for the period between 2015 and the end of 2019, virtually all of the market gains were concurrent with FOMC operations. I will focus in this post on the periods of high complacency as identified by extremely high levels of the 100SMA (20wk SMA) of the Equity Put/Call ratio. If you want to read those posts, the first is here and the second is here.

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