Yo Pit Crazies,
As hard as it is to believe, there is still serious wrangling going on in Washington D.C. about the new spending package.
In a real way it is keeping the volatility up because of the uncertainty in the package.
I wrote on Friday about the market pricing the action, but now that Speaker Nancy has secured the move in the debt ceiling, traders are moving onto the next thing. VIX came off from near Zone 4 (24+).
Inflation, taxes and the usual brew of issues are still there so VIX is still in the low-20s, but I don’t expect it to last.
What will last is the cash cow that is COVID. Merck and Co. (Ticker: MRK) says they have a Covid pill
What does Big Money Flow see?
What Shows for the Flow.
Insane option buying that is what Big Money sees.
Sort of …
Note below MRK Oct. 08 90-strike calls for 18,048
LiveVol Option prices and volume. Closing print Oct. 01, 2021.
There is a lot of volume on that strike to be sure and during the last year that YOLO option flow has paid in names like GameStop (Ticker: GME) or AMC Entertainment (Ticker: AMC) that were widely shorted. Mark is still following those trends with Robinhood Trader.
MRK is not a widely shorted name, so flow reading is different.
But I am looking for Big Money Flow (and Mark will hit that again this week) …
Note below how the big volume is in multi-leg trades.
This suggests a more nuanced rally for MRK instead of the crazy jumps of the YOLO brand from here on out.
Livevol options stats for time and sales in big blocks.
The COVID siren has been fickle too this year. The potential of a new pill to reduce symptoms is very alluring.
As with Pfizer (Ticker: PFE), Moderna (Ticker: MRNA) and Regeneron (Ticker: REGN) the breakthroughs can lead to early gains that can go away in a hurry when the next shiny object appears.
I think that accounts for the more nuanced Big Money Flow in MRK.
The Lesson: Get on board with Big Money Flow.
To Your Trading Success,
AG