Market Overview
The SPY is having a rough session today, selling off hard after a gap up open and trading down to 741 intraday, well below yesterday’s close of 766.81. That is 1 consecutive close below the 21 EMA and today’s action threatens to accelerate the breakdown, with price now sitting more than 20 points under both the 21 EMA at 763.13 and the 50 day at 765.99. The 8 EMA has rolled over to 757.53 and the spread between it and the 21 is converging bearishly, which is not what you want to see. VIX at 24 tells you there is real fear in this market right now. The 200 day at 727.43 is the next meaningful level if sellers stay in control.
The dominant theme in morning flow is bullish SPX risk reversals, with two massive prints totaling over $340M in premium pointing toward higher index levels into year end. That said, there is a notable bearish counter-block in SPX risk reversals and a sizable SPY bear put spread targeting the 700-730 range by late November, so this is not a one-sided tape. QQQ call activity is adding to the bull case on the tech side, and AMD is seeing a large bullish risk reversal in Dec27 strikes that stands out as a high-conviction individual name bet.
