S2Ep119 | The Board Got Ready For A Rally And The Close Did Not Get The Memo | Calls Covered, Puts Written, Volatility Crushed, And Now We Open 35 Points Lower | The First Question Today Is 23,900, Not 24,000 | 7th Sept Monday

On Friday every positioning signal on the Nifty option board moved the same way, and every one of them moved up. Calls were bought back, puts were written, volatility was crushed, the professional desks flipped long and retail stopped selling puts for the first time in six sessions. Then the market closed on its low, and this morning we open 35 points lower.THE TAPE. The Nifty finished 23,897.70, up a tenth of a percent. At 11:30 it was 24,005.75. By the close it had given back 108 points and finished 1.85 points off its own low. The Sensex closed 76,515.43, and that closing price was also its exact low, 367 points under the afternoon high. India VIX fell 6.44 percent to 10.61, under 11 for the first time in this run.WHAT LED WAS NOT WHAT LED ON THURSDAY. Sensex plus 0.48, Nifty plus 0.10, Bank Nifty minus 0.02, Midcap Select minus 0.31, Realty minus 0.66 after plus 2.58 the day before. The large caps led and the broader market did not, which is why my rotation call missed. In the stocks, the wires and cables complex broke: KEI minus 8.95 percent on 1,173 crore, Polycab minus 5.76 on 1,303 crore, RR Kabel minus 6.25, Dynamic Cables minus 10.36, with Finolex, Havells, Universal and Apar all following. Nine names in one industry, one afternoon, on real money.THE BOARD TURNED HARD. Call open interest fell 107.88 lakh. Put open interest rose 290.94 lakh. The put call ratio went from 0.656 to 0.844, the biggest one day jump of this run. 24,000 lost 32.15 lakh calls and 23,900 lost 27.45 lakh, while 23,900 gained 41.81 lakh puts and 23,800 gained 38.65. On Thursday 24,000 took 96 lakh calls in a single session. On Friday a third came straight back off.EVERYTHING IS NOW ON 24,000. Max pain moved up there from 23,950, the gamma flip moved up there from 23,900, and it is still the heaviest call strike at 151.78 lakh. Three things at one price, 102 points above the close, which means we sit 102 points inside negative gamma against 27 on Thursday. The September future closed 24,048.10, a basis of plus 150.40 after 34.50, 85.85 and 126.65, and the cash has not validated it once.THE ONE BOOK THAT DID NOT TURN. Professional desks flipped to net long calls, a swing of 1,48,130 contracts and the seventh flip in eleven sessions. Retail bought back 85,563 puts, the first cut after six sessions of building. But the foreign index futures short went to 2,35,838, another run high.OVERNIGHT, AND ASIA IS SPLIT DOWN THE MIDDLE. KOSPI plus 2.88 percent this morning, the Nikkei plus 2.30, Taiwan plus 1.42. Against that, Hang Seng minus 0.81, Singapore minus 0.50 and GIFT Nifty minus 0.14. Japan, Korea and Taiwan are flying and we are not in it, so do not let anyone tell you Asia is up. America closed lower on Friday and the Dow future is down another 0.29 percent, and every Indian ADR but two finished lower with Infosys down 3.23 percent in New York. Also a correction: I said on Friday the oil run had stalled. It has not. Brent is 96.60 and climbing again.THE PLAN. GIFT at 23,976.50 puts the open near 23,850 to 23,880, about 35 points lower, and that opens us below 23,900. Which changes the first question of the day. It is not whether we take 24,000. It is whether we reclaim 23,900. That strike carries 111.19 lakh puts and 41.81 lakh of them were written on Friday afternoon, so opening underneath it puts every one of those writers on the wrong side of their own strike. Reclaim it in the first hour and Friday's positioning starts working. Resistance 24,000, 24,100, 24,200. Support 23,900, then 23,800 and 23,500. Do not chase the first fifteen minutes of a gap down.