Don here…
I have data going back to 2017 showing that in any given week, there’s over a 90% probability the market hits either the upper or lower edge of its expected move.
This week we didn’t come close.
That pent-up gamma risk doesn’t disappear. It rolls straight into next week when the Fed takes center stage Wednesday.
Everyone thinks the quarter-point cut is a done deal. The market’s pricing it at 87% probability. But that’s not what matters.
What matters is Jerome Powell’s commentary afterward. I think he’s going to signal this could be the last cut for a while. That hawkish turn on future outlook is NOT priced into these levels.
And the setup walking into it looks dangerous.
This week delivered almost nothing. The S&P moved maybe 40 points total despite last week’s 250-point explosion. Volume dried up completely. We’re barely pushing 1 million SPX contracts.
Meanwhile, volatility futures are screaming a different story. VIX futures 47 days out are pricing vol back up at 19 versus 15 right now. That’s a massive pop being anticipated. The market sees real risk ahead.
Tech can’t find direction either. One day Apple’s bid, the next it’s flat. Meta rallies on layoffs while Microsoft and Amazon drop. These rotations keep canceling each other out. Without higher correlation across the mega caps, we’re just slopping around going nowhere.
Bitcoin adds more pressure. It’s down 3.5% today with minimal short interest to create any relief bounces. When that selling accelerates, it’s going to pull tech names like NVIDIA down with it.
In this video, I walk through exactly what’s building beneath the surface:
- Why next week’s $104 expected move is dead wrong
- The gamma risk compounding from this week’s non-event
- What Powell’s commentary could do to current positioning
- Bitcoin’s breakdown and its direct impact on tech stocks
- The critical correlation signals to watch in mega-cap tech
The Fed meeting is the fuse everyone sees coming. But the explosives are already in place.
