As the US equity market continues to experience volatility, a recent observation by UBS’s Rebecca Cheong has caught our attention. According to Cheong, excess flow showed no alarm on Thursday morning, with orderly selling totaling $26 billion. What’s more interesting is that retail buying was the most active during this time, suggesting a level of stability in the market.

Cheong notes that since 12:15pm, excess flow has stabilized and remained almost flat. This is significant because it indicates that there is no panic selling or sudden shift in investor sentiment. Additionally, the VIX cross-asset rank of 54% shows no sign of alarm compared to other asset classes. This suggests that investors are not overly concerned about potential risks in the market.

Furthermore, dealer gamma is also relatively low on Friday, totaling $4 billion long. This indicates that there is limited selling pressure from hedge funds and other market participants. Cheong notes that risk control funds are expected to have minimal selling even if the S&P 500 falls by 1%, with only $15-20 billion in potential sell orders.

Looking at the data more closely, we can see that the closest trigger levels for CTA selling are currently set at -0.7% for the Nasdaq 100 (NQ1) and -1.4% for the S&P 500 (ES1). However, these levels are still far away for the Russell 2000 (RTY), which has a trigger level set at -5.8%.