Midday market 12/29: Shorts-cover rally after tax-loss harvesting

The market opened Thursday's trading session in a fairly stable state. Buying force appeared right from the opening minute with the afterglow from last night's overnight futures session pushing the tech sector up steadily in the first 2 hours. This push mostly came from a large amount of put-gamma continuing to decay as SPY crossed above 380, as well as real buying flow from investors after selling off the past 2 days to prepare for 2023.

Cash flow concentrated heavily into tech and small-caps, pulling the overall index through gamma-sensitive levels, especially SPY/SPX at 380/3835, before starting to stall and showing signs of exhaustion during the day when no longer pulled by the JPM Collar trade at SPX~3835. Additionally, short pressure was also significantly reduced on large and gamma-sensitive stocks like Tesla as investors are not comfortable opening new short positions right before vehicle delivery data, as well as after the positive report with $250 price target from Morgan Stanley this morning.