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Small Cap Gang Trampled Last Week...

November 21st, 2021

Market Update for the Week Ahead

It was a difficult week in the markets for the small-cap gang last week. Double digit losses in some growth names with red engulfing the performance heat map for the week. The idea of the market making new highs is an illusion with market breadth and participation sitting at almost 30% in most rallies… after all this, what is the Options Market telling us this week? Let’s dive in and see what's ahead for the upcoming trading week!


Market Overview - Broad Market

Lots of premium was flowing through the indices (as usual) this time bearish flow was behind the more popular SPY and IWM ETFs. The SPY closed -0.18% on Friday, which although is red is still relatively flat. On the other hand the Russell 2000 “small-cap” ETF (IWM) closed down -0.91% on Friday. This is a better representation of the pain many investors have been feeling as growth stocks seemed to be getting hit almost every day last week.

As expected most of the option volume was flowing through mega-cap and household names like Tesla, Amazon, and Apple. These companies have been nearly solely responsible for pushing the SPY to new highs. What many were expecting to be “small-cap summer” and the time for them to shine has quickly become bag-holder’s anonymous. Hang in there investors, small-caps will eventually rise from the dead.

Live Charts


Market Overview - ETFs

The U.S 10-year ticked down this week and in turn also brought some bearish flow in the direction of the HYG ETF. Overall 'PUT' option flows through HYG has been the trend over the last several weeks which has correlated closely with the share price of the popular high-yield bond ETF.

We are also seeing the Financials Sector cooling off after a big run earlier in the year. Other notable ETF flow is through SMH, the Semi-conductor ETF, mainly being led by Nvidia and the massive bull-run we just witnessed. Here’s the break-down for the ETF if you are looking to gain exposure in the booming semi’s market without going “all in” on only the popular names.


Market Overview - Most Popular Names 

Moving right along, Friday's bullish action was all about the Semi's and Vaccine plays. 

Semi-conductor names making the list: NVDA, MU, QCOM, and TSM.

Vaccine plays: JNJ, PFE, and MRNA.

In terms of single stock picks, Nvidia (NVDA) has been the talk of the town. The stock is up 40% in just the pre-earnings run and up another 13% since they reported last week. Heavy volume and option flow running through this name and players are quite possibly expecting this bull-run to continue. NVDA currently has a market cap of $822 billion and may just become the very first trillion-dollar semi-conductor company. AMD and the other semi’s crew are all ones to benefit from this strong performance in Nvidia.

The price action through NVDA led me to have a glance at the GEX chart.

In the past we’ve seen similar bull-runs slow down where the share price met the Gamma Exposure (GEX) “ceiling”. Going through NVDA’s GEX, the share price is sitting somewhere in the middle of all those call options (green lines) creating upward buying pressure. It’s hard to say where this will top out, but keep an eye on it as the share price climbs closer to the $350 level and the buying pressure/GEX begins to thin out. Of course, with continued strong performance there may be more call-buying in further OTM call options which would transition into a new GEX chart.


Matrix Scan - The Hot 100

Friday’s action in the “Stocks Only: Top 100” scan was almost all about Apple calls. The company made it public this week that they will be working on the Apple car to potentially be launched in 2025.


Apple’s share price was up 1.70% on Friday and a look at the GEX chart might show the stock could potentially need a breather before the next leg up or down.

AMC Max Pain

What we find to be most interesting about GEX is the fact that it can really push a stock to go in one direction. If you recall, Apple share price was almost stuck in the $145-150 for the last month. As soon as it broke that $150 bullish GEX line this week the stock just took off and is now sitting at the $160 level. Sliced through the $150’s level like butter, all thanks to call buying and Gamma Exposure.


Hot Options Name - Roblox 

Similar to Apple, Roblox was a name that just sort of “did nothing” since it’s IPO several months ago. Their earnings report was the straw that broke the camel’s back, except to the upside.

They didn’t report spectacular numbers, but they did report an increase in DAUs and just last week they announced a partnership with Nike to create a Roblox virtual world, Nike Land.

Roblox shares are up 25% in the last week and 60% in the last 3 weeks. Doing a quick search in the OptionsMatrix for Roblox flow brings up a whole slew of call-buying. This list is sorted by premium in descending order so these are the largest bets being placed on Roblox.

GME Max Pain

Almost the entire list is “high-energy” calls being bought on the ask side (bullish) if you look at this with all the large premiums.


What to Watch - Upcoming Week

Retail sales came in hotter than expected last week, which suggests holiday shopping has already commenced. Consumers may be starting to purchase gifts and products early with all the supply chain limitations going around. Next week we have existing and new home sales with a shortened week for Thanksgiving, but this time of year is usually a good time to be long stocks and long America.

Outside of economical events Metaverse stocks like Roblox, Unity, Facebook, et al have been showing strength. As the world begins to understand a little bit more about what the metaverse is, how it will work, and who the players will be (servers, 3D modeling, social networks, digital payments, etc) you might see even more institutional buying into these names.  

We hope everyone has a great trading week! Make sure to check out our Fantasy Stock Games this week as we start Week 4 of the contests and we are starting to build out player rankings plus a whole lot more. Enter for free to any of our numerous contests this week and show your stock and crypto pick 'em skills!