Monday looked like nothing happened. Brandon Chapman pulled up the tape and found one trade that quietly ran the entire session.
2.3 million shares printed at 763.96 on the SPY. Nothing that size crossed during regular trading hours, so Brandon reads it as a dark pool fill.
That number became the map. It acted as resistance, then support, then support again, then it finally broke.
Brandon expects 764 to keep working the same way all week. It acts as support above and resistance below.
Above it sat a wall. Roughly 19,000 contracts stacked at the 765 strike, and every push into that level got sold back down.
The floor at 760 never got touched. The S&P 500 spent the day inside a 30 point range because of those two barriers.
Friday’s expiration redraws the board. 770 becomes the upside level. 760 becomes the downside trigger, with 750 sitting underneath it.
A break below 765 drops the tape into negative gamma. Dealers sell into weakness and buy into strength, and volatility expands from there.
Oil gave the first crack. Crude fell about 2.4% on news that roughly 400% more oil is escaping through the Strait of Hormuz.
Brandon caught the follow through in the option tape. The Ghost Print Surveillance Console flagged about 20,000 December 60 puts bought in XLE, with 15,000 of them hitting in a single print near the close.
He took a bearish Block Hunter swing on XLE the same session. It ran up about 70% before fading, and he’s still targeting 62.
The bigger story sits in the bond market. The Treasury raised its per operation buying from $2 billion to $4 billion to stabilize longer dated bonds and notes.
Japan holds over a trillion dollars in US treasuries. Rising energy costs may force them to sell those bonds, convert to dollars, then buy yen to defend the 160 line.
Tonight’s video walks through the levels and the trades behind that setup:
- A 2.3 million share print at 763.96 controlled Monday’s entire range. Brandon treats 764 as the pivot for the rest of the week.
- XLE saw roughly 20,000 December 60 puts bought, with 15,000 in one print near the close. Brandon is targeting 62 on his bearish swing.
- The Treasury doubled its per operation size to $4 billion. The general account has grown from about $500 billion to just shy of $1 trillion.
- Gold gained 0.79% while the S&P 500 slipped 0.3%. GLD cleared 425, and open interest thins out until 440 to 445.
- Financials rallied 1.29% on the Treasury news. Brandon flags Bank of America as a short candidate once that lifeline runs dry.
Two events decide the rest of the week. Nvidia reports Wednesday after the close, and Fed President Warsh delivers his Jackson Hole address on Friday.
13-week T-bills yield 3.7% against a Fed funds rate of 3.5% to 3.75%. The market is already pricing a rate increase into that spread.
Institutions split their bets today. They bought 25,000 November calls in EWZ and calls in SLB, then loaded puts in FXI, wheat, and precious metals.
That split resolves once Nvidia and Warsh speak. The levels tell you which way it broke.
