Market Overview
The SPY is now on its 3rd consecutive close below the 21 EMA and the chart is deteriorating fast. Yesterday’s session was brutal, dropping from an open near 765 all the way down to close at 733, wiping out all the recovery work from the prior week. We’re sitting at 739.85 today (noon) with the 8 EMA at 752 and the 21 EMA at 760, both of which are now acting as overhead resistance. The 200 day at 727.67 is the next meaningful floor if this selling continues. VIX at 24.1 confirms there’s real fear in the market right now, not just routine noise.
The dominant theme in SPX flow this morning is bullish risk reversals, with the largest print being a $381M package in Feb27 structures, and several more in the same direction totaling well over $500M in net bullish SPX premium. That said, there are meaningful bearish risk reversals mixed in, so this isn’t a clean one-sided tape. On the sector side, semis are getting bought hard, with a $25M bullish risk reversal in SOXL and $13.7M in puts sold on SOXX Dec27, suggesting smart money is fading the semi selloff rather than chasing it lower.
