Hi traders,
This week’s violent selloff was a reminder of how quickly markets can move when liquidity is thin. In our view, weak liquidity helped amplify the selling, and the market may still have room to go lower.
That’s why we’re adding a new liquidity indicator to the TMAD app, with a planned rollout later next week. Updated daily, it tracks key market metrics to help us assess liquidity conditions and financial stress. The goal is to give us a clearer picture of whether conditions are weakening or whether there may be support for buying a dip, so we can make more informed trading decisions.
Think of it as a tool for identifying a more vulnerable market, rather than a guaranteed sell signal. I’m still cautious here: a sharp bounce alone wouldn’t convince me that the downside is over.
As you can see here, the market kept moving higher and retail investors were buying the dip, but our liquidity index was trending downward and turned negative shortly after the September FOMC meeting.
You can get access to our indicator and TMAD App by simply becoming a paying member of our Substack.
New on TMAD App: Options Heatmaps
We’ve also added heatmaps for liquid names across the TMAD app! You can now see changes in open interest and gamma exposure, or GEX, across strikes and expiration dates.
To explore them, click a stock or ETF name to open its page. From the call-flow section, select Open heatmap. You can switch between calls and puts and explore different views, including changes in open interest and GEX.
Here I’m looking at DRAM, the memory ETF. Click a cell in the heatmap to see the details for that options contract and investigate the activity behind the color.
Here we can see that open interest changed massively on November 20, $40 strike calls. We don’t pay attention to the 0dte or close to expiry as that’s usually noise.
