Good Morning!

What a ride yesterday was in the market! Thankfully our analysis was spot on again! I said that I’d trade a flush on market open and sure enough we flushed down from 656 to 650 before we started slowly rebuilding throughout the day and then closed strong. Then after hours the market exploded higher.

I’ve been getting a ton of requests to provide live and real time updates. That’s not what I set out to do when I started this email but if enough of you all want live updates I’d consider providing them.

What do you think?

It’s no secret that SPY jumped massively in the post market yesterday. The market has completely repositioned around the jump/news. What we are looking at now is a pocket of resistance (positive gamma shown on the chart) from 677 to 680. However, as we stand now, there isn’t much above that range. Clear 680 and the potential to squeeze is there.

On the flip side, while technically negative gamma still exists below it is very minimal. I would even go as far as to call it completely non impactful. That doesn’t mean the market can’t go down, it simply just means that dealers don’t need to hedge it down intentionally. I look for there to be a complete rebuild of gamma today after the massive move. Dealers will reposition and that will give us a more clear view of how we stand and how we can trade SPY.

What are the 2 paths to a profitable trade today that I see? I think over 680 we have the potential to squeeze. I am a bit concerned that after this massive gap that we have the strength to get there today. The other potential trade is a pop and fade. A gap up this massive has the potential for a mild fade at some point throughout the day.

I ultimately want to see how dealers reposition before I place any trade. Once the market opens, positions will begin to build and we will have a more clear vision on how to navigate. The key in the market is never forcing moves but waiting on a very clear setup that has a high % likelihood of happening.

I think the market will give us one of those setups. As soon as I see it I will definitely share!

Happy Trading!

-Caleb Gregory