Brandon Chapman just flagged a volatility signal screaming correction.
The VIX 3-month to VIX ratio hit 1.2 today. Skew is sitting at 130.
Together those readings point to a 5% to 10% correction in the S&P 500 within the next 30 days.
Brandon walked through the catalyst lineup tonight. CPI hits Tuesday. PPI prints Wednesday. Core retail sales land Friday.
Then NVIDIA reports earnings next week.
That report is the real pivot point. Dispersion rocketed up today back to the same levels we saw heading into Mag Seven earnings.
Here is what Brandon is watching in tonight’s video:
- SPY 740 is a massive call wall holding price down. Brandon bought a 740/738 put spread for 50 cents and sold it for a buck. He doubled his money intraday as price reversed off the gamma level.
- VIX expiration Wednesday and monthly expiration Friday set up a volatility expansion. Brandon expects the real move to accelerate after NVIDIA reports next week.
- Options flow is turning bearish in cyclicals and financials. Nike saw 8,700 contracts bought on the June 5th 42 puts. Whirlpool printed 13,000 contracts on the September 18th $30 puts.
- Wells Fargo and JP Morgan are absorbing put pressure. XLF is sitting on support and a break opens the door back to 49.
Brandon’s downside math on a post-NVIDIA unwind is a 5% drop on the S&P, 10% on the Mag Seven, and 20% on NVIDIA itself.
