The 90-Second Read
CPI is the test
- Monday was a thrust The S&P 500 rose 2.35% to 7,549.94, the Dow rose 2.15% to 52,389.75, the Nasdaq Composite rose 2.74% to 25,253.14 and the Russell 2000 rose 3.15% to 2,840.81. The fear gauge fell by about 22% in one session.
- Chips ripped, Nvidia did not The semiconductor fund SMH gained 5.05% to 487.41 and AMD jumped 13.26% to 508.58, while Nvidia fell 4.27% to 178.67 as its board investigates its chief executive, Jensen Huang. Nvidia indicates 179.25 this morning, a small bounce.
- Futures are marking time Dow futures are higher against Monday's settlements, Russell futures are level, and Nasdaq-100 futures are lower. After a move this large, a pause is the ordinary reading; it is not a reversal.
- The bear case is being retired by some Morgan Stanley's Mike Wilson told clients the correction is nearer its end than its beginning, while still allowing one more test of last week's lows. His full argument is in Section 6.
- CPI at 8:30 October consumer prices print against a September reading of 0.6% for the month and 3.7% over the year, with core at 0.3% and 2.6%. A Fed speaker is on the tape nearly every day this week, and Logan speaks at 10:50.
- Supply and a holiday The Treasury sells $42B of 10-year notes at 1:00 PM, the 30-year bond follows Thursday, and the bond market is expected to be closed Wednesday for Veterans Day. Thin Treasury trading and a quiet U.S. data calendar sit on either side of a heavy Tuesday.
- Levels into the open A public dealer-gamma (GEX) model puts the put wall at 7,500 and the call wall at 7,700, the same two strikes that carry the heaviest open interest in the November 20 SPX chain. The gamma flip sits far overhead at 8,013.67, so the index trades in negative gamma, where dealer hedging tends to travel with price. ES Dec carries a 24.31 premium to cash.
The Scoreboard
| Instrument | Level | Change | Session |
|---|---|---|---|
| S&P 500 | 7,549.94 | +2.35% | Mon close |
| Dow Jones Industrials | 52,389.75 | +2.15% | Mon close |
| Nasdaq Composite | 25,253.14 | +2.74% | Mon close |
| Russell 2000 | 2,840.81 | +3.15% | Mon close |
| ES Dec 26Monday settle 7,574.25 | 7,572.50 | −0.02% | 5:47 AM ET |
| NQ Dec 26Monday settle 28,014.50 | 27,901.50 | −0.40% | 5:47 AM ET |
| Dow futures (YM Dec 26)Monday settle 52,498 | 52,658 | +0.30% | 5:47 AM ET |
| Russell futures (RTY Dec 26)Monday settle 2,848.70 | 2,849.10 | +0.01% | 5:47 AM ET |
| WTI Dec 26Monday settle 86.85 | 85.35 | −1.73% | 5:47 AM ET |
| Gold Dec 26Monday settle 4,114.50 | 4,083.90 | −0.74% | 5:47 AM ET |
| Dollar index | 101.70 | — | 5:47 AM ET |
| US 10-yearTreasury yield | 4.86% | — | Mon close |
| NvidiaMonday close 178.67 | 179.25 | +0.32% | 5:59 AM ET |
| AMDFriday close 449.04 | 508.58 | +13.26% | Mon close |
| Semiconductor fund (SMH)Friday close 463.96 | 487.41 | +5.05% | Mon close |
Rows with a clock time are overnight reads against the prior settlement; the settlements shown are Monday's session settlements, which is why the overnight changes are measured from them. Cash index, Treasury and fund rows are Monday's closes.
Sentiment & Flow Gauges
| Gauge | Reading | Read |
|---|---|---|
| VIXFriday close 25.64 | 19.92 | EASING Volatility fell sharply but still sits above the 16.61 of Wednesday. |
| AAII bearish shareWeek of Nov 4 · latest survey | 48.4% | BEARS LEAD Bullish respondents were 34.1%; the survey predates Monday's rally and updates Thursday. |
| S&P 500 new highs / lows52-week · prior session | 27 / 2 | BROAD Highs clearly led lows, up from 7 and 4 a session earlier. |
| S&P 500 above 200-dayprior session | 62.7% | HEALTHY Participation above the long-term average climbed from 55.4% a session earlier. |
| S&P 500 up / down volumeprior session | 77% up | BUYERS Roughly three of every four shares traded were in stocks that rose. |
| High-yield spreadICE BofA HY OAS · Nov 6 | 3.42% · −2bp w/w | STABLE Credit spreads are about where they were a week earlier. |
Flow Read
None of the four breadth conditions fired on Monday. New lows did not outnumber new highs, neither side of the volume tape reached 90%, the closing trading index was not at an extreme, and large and small caps advanced together rather than diverging. The day was a broad advance, but it was not a one-sided washout, which is what a capitulation low tends to look like.
Yesterday's Calls Graded
Calendar & Scenario Map
| Time ET | Event | Consensus | Prior |
|---|---|---|---|
| Tue 6:00 | NFIB small business optimism index, October | — | 97.9 |
| Tue 8:30 | Consumer price index, October, month over month | — | 0.6% |
| Tue 8:30 | Core CPI, October, month over month | — | 0.3% |
| Tue 8:30 | CPI, October, year over year | — | 3.7% |
| Tue 8:30 | Core CPI, October, year over year | — | 2.6% |
| Tue 10:50 | Dallas Fed President Logan speaks | — | — |
| Tue 1:00 PM | 10-year Treasury note auction, $42B | — | — |
| Tue 1:30 PM | Kansas City Fed President Schmid speaks | — | — |
| Tue 3:30 PM | Fed Vice Chair Bowman at the Council on Foreign Relations | — | — |
| Tue 6:30 PM | Fed Vice Chair Bowman and Philadelphia Fed President Paulson speak | — | — |
| Tue after close | CoreWeave third-quarter results; call at 5:00 PM | — | — |
| Wed | No U.S. data releases or Fed speakers; the bond market is expected to be closed for Veterans Day | — | — |
| Thu 8:30 | Weekly jobless claims | — | 189K |
| Thu 9:00 | Cleveland Fed President Hammack speaks | — | — |
| Thu 10:00 | Existing home sales, October | — | 4.0M |
| Thu 10:00 | Fed Governor Barr speaks on artificial intelligence | — | — |
| Thu 1:00 PM | 30-year Treasury bond auction, $25B | — | — |
| Thu 1:10 PM | San Francisco Fed President Daly speaks | — | — |
| Thu 2:00 PM | Monthly Treasury balance, October | — | −$27B |
| Thu 4:30 PM | Fed balance sheet (H.4.1) | — | — |
| Thu 6:30 PM | New York Fed President Williams speaks | — | — |
| Fri 8:30 | Producer price index, October | — | 1.3% |
| Fri 8:30 | Core PPI (ex food and energy), October, month over month | — | 0.7% |
| Fri 8:30 | PPI, October, year over year | — | 6.3% |
| Fri 12:00 | San Francisco Fed President Daly speaks | — | — |
Prior figures are shown where the calendar carries them; consensus is not available on the calendar used.
Pivot Points & Gamma Map
| Gamma level | SPX | ES Dec · +24.31 | Role in today's tape |
|---|---|---|---|
| Call wall | 7,700.00 | 7,724 | Ceiling, 150.06 points above cash. The largest call open interest in the November chain sits at the same strike, 30,038 contracts, so the gamma ceiling and the contract-count ceiling agree. |
| Gamma flip | 8,013.67 | 8,038 | The regime boundary, 463.73 points above cash and above the call wall itself. Below it dealer hedging travels with price and extends moves; ES would have to reach 8,038 to put the tape back in the dampened state, which is not a one-session question. |
| Max pain | 7,565.00 | 7,589 | Wednesday's expiration magnet, 15.06 points above cash. It is a live reading that shifts as open interest changes, and near the money it marks a zone rather than a point. |
| Put wall | 7,500.00 | 7,524 | Floor, 49.94 points under cash, and the heaviest put open interest in the November chain, 40,360 contracts. In a negative-gamma tape a break under the floor has tended to accelerate rather than stall. |
Two other strikes in the November 20 chain carry weight: 7,600, with 21,885 puts and 10,020 calls, and the 7,400 put shelf, with 24,034 puts and 10,864 calls. Cannon's daily levels for ES Dec put the pivot at 7,512.17, first resistance at 7,660.58 and first support at 7,423.83, almost on top of the 7,400 shelf.
The near-dated chain tells a shorter story. In the ES weekly that expires Wednesday, read across 7,365 to 7,800, the largest call open interest above the market is 1,488 contracts at 7,625, with 1,206 at 7,700, and the largest put open interest below it is 1,842 contracts at 7,440, with 1,546 at 7,435. Those numbers are small beside the monthly chain, so the structure comes from the November 20 map and the weekly only describes today's pin.
Institutional Positioning
Wilson, Morgan Stanley's chief investment officer, said on Monday that "this correction looks much closer to the end than the beginning." The S&P 500, he said, has moved toward the 7,100 to 7,300 support range he identified in August, and he would not be surprised by one more test of last week's lows, perhaps even a break on lower momentum. Semiconductors, in his words, are down roughly 40% from their June highs, and he put the index on 18 times forward earnings.
His preference is to use weakness over the next few weeks to add risk in quality cyclicals that have de-rated but still show strong earnings revisions, with industrials standing out. He called positioning and sentiment closer to capitulation levels but not quite there, warned that a more hawkish Fed could stretch the bottoming process into December, and said it is not the moment to get bearish. He gave no new index target.
Desk Shift Tracker
| Voice | Stance | What moved |
|---|---|---|
| Mike WilsonMorgan Stanley | CONSTRUCTIVE | Sees the correction nearer its end, allows one more test of last week's lows, favors quality cyclicals. |
| Tom LeeFundstrat | CONSTRUCTIVE | Argued after Monday's rally that markets are safer than many believe. |
| Ed YardeniYardeni Research | CONSTRUCTIVE | Holds his 7,900 year-end target; a new note calls semiconductors cyclical but with a bullish long-term trend. |
| Karen FirestoneAureus Asset Management | MIXED | Bought more Broadcom, Chipotle and LVMH and trimmed Apple. |
Macro Pressure Map
| Driver | Reading | Read |
|---|---|---|
| Net liquidityFed balance sheet − TGA − RRP · Wednesday levels · updates Thu | $5.81T · ▲ $82B w/w | ADDING Wednesday's reading; the next update comes Thursday after the Fed's balance-sheet release. |
| Crude oilWTI Dec · Monday settle 86.85 | 85.35 | SOFTER Oil extends its slide after a sharp drop on Monday; Wilson cited hopes for progress with Iran as a reason it has fallen. |
| Treasury yield10-year · Monday close | 4.86% | STEADY The yield held this level through Monday's rally ahead of CPI and the auction. |
| GoldDec · Monday settle 4,114.50 | 4,083.90 | SOFTER Gold gives back part of Monday's gain overnight. |
Portfolio Positioning
| Name | The story |
|---|---|
| Nvidia | The stock closed Monday at 178.67, down 4.27% from Friday's 186.64, and indicates 179.25 this morning. The board's investigation of Huang is the headline; the stock fell while the group rebounded around it. |
| AMD | AMD gained 13.26% on Monday to 508.58, trading as the beneficiary of the sorting inside the group rather than as a victim of it. |
| Semiconductor fund | SMH closed Monday at 487.41, up 5.05%, recovering part of the Thursday plunge even with its largest holding lower. |
| CoreWeave | The stock rose 5.56% on Monday to 48.98 and reports third-quarter results after the close, with the call at 5:00 PM. |
Fed Watch
No policy meeting is scheduled this week, but the speaker list is crowded and every voice will be asked to read the inflation number. Logan speaks at 10:50 this morning, Schmid at 1:30 PM, and Vice Chair Bowman at 3:30 PM and again at 6:30 PM alongside Paulson. Wednesday has no Fed speakers. Thursday brings Hammack at 9:00, Barr at 10:00, Daly at 1:10 PM and Williams at 6:30 PM, with the Fed's balance-sheet release at 4:30 PM, and Daly speaks again Friday at noon after producer prices.
What the Consensus Is Missing
The rebound is being built without the group's biggest name
Semiconductors rebounded sharply while the sector's largest company fell on a governance story. That makes the bounce a market of many names rather than one leader, and it will be tested tonight when CoreWeave reports.
Price jumped, sentiment did not
The S&P 500 gained more than 2% in a session, yet the latest sentiment survey, taken before the rally, still shows bears well ahead of bulls. Those surveys usually lean against a market, and Thursday's update will show whether the rally changed anyone's mind.
A pin with no shock absorber
The index sits between its two walls with the flip far overhead, so dealers are short gamma across the whole range. That combination tends to look calm while the walls hold and then move fast once one gives, which makes the first wall tested after CPI more informative than the print itself.
eli@cannontrading.com · cannontrading.com
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