Brandon Chapman just mapped where the next leg lower begins.
The dealers dropped the ceiling all week. Skew spiked to 152 as the VIX surged.
That combination is rare. It means slow grinds higher and violent drops lower.
Brandon walked through gamma exposure on the SPY. It is one of the few places you can calculate where dealers transact inside a range.
Negative gamma forces dealers to buy rallies and sell dips. That feeds instability. Positive gamma flips them to sell rallies and buy dips.
760 held the entire week. The S&P 500 could not break it.
Wednesday sat in positive gamma. Thursday the regime flipped negative. Friday Brandon watched the dealers draw the call wall down to 755.
The market broke support. Volatility expanded. Seasonality leans the same direction, with the last 20 years showing a top forming in early June.
Friday’s break of 750 opened the door to 743. The 740 level turned into a magnet. Roughly 73,000 contracts of open interest pinned it into the close.
Today the SPY opened near 743 with almost zero gamma. That left room to run toward 750. That was the bull case.
Then the selling hit. Traders sold the 743, 744, and 745 calls all session. Market makers had to buy them, which handed dealers positive gamma above price.
The rally stalled at 745. It wilted back to 743, then 742.
One line stuck with me. You walk the stairs and fall out the window.
The downside is closer and easier from here. Below 740 the market drops into negative gamma. Dealers sell into the weakness.
Here is what Brandon broke down in tonight’s video:
- The call wall fell from 760 to 745 over the past week, boxing the S&P 500 in with limited upside and heavy downside.
- The skew index spiked to 1.52 on Friday as the VIX surged, a rare reading that signals slow grinds up and fast drops down.
- Tomorrow’s 745 strike shows roughly 73,000 call contracts against 12,000 puts, nearly seven to one, capping any rally.
- A break of 740 that fails as resistance opens a fast slide to 735 inside a negative gamma regime where dealers sell weakness.
- Bulls need an overnight gap above 745 to reach 750, a move of 10 points on a $700 product worth about 1.5%.
