The Volatility Index, VIX is higher pre-market, dampening Monday’s rally in the key indices S&P500 and SPY ETF. Gamma put walls are being tested as futures move back into Monday’s price action. SPX futures will most likely build up the profile just below a very deep profile around the 2595 zone.
Summary
S&P500 Futures
Futures are beginning to show signs of building a profile in this zone, near 2570 (+/-). We’ll watch for consolidation.
Note the larger profile 2532 (+/-) which could be tested today if the S&P500 retraces a bit today.
Also note, the PutWall has moved to 2600.00 from 2500.00. Support is adjusting higher as dealers and market makers are forced to cover their short put positions. As volatility drops, so does their premiums/profits.
VIX is the key, as mentioned in the weekend video.
SPY Put Wall at 260.00
SPY Put Wall also adjusted higher. If you are new to the concept of positive and negative gamma, watch this interview with Brent Kochuba.
SPY resistance is just overhead, starting with 38.2% Fibonacci and 21d currently at 264.77, then 50% Fibonacci, 61.8% and ultimately the 200d. We are not suggesting a “V” shape recovery, as this morning’s pre-market action confirms back and fill is the more likely scenario.
Other things to watch today. Chinese stocks and indices, as we watch for more large dark pool blocks hit the tape today. (FXI).
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Vinny
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