It was another active Treasury settlement day, with the S&P 500 finishing lower by 56 bps on Thursday. That now means the S&P 500 has finished higher in just 12 of the last 35 settlement days. Bitcoin continued its pattern of falling on settlement dates as well. At least, however, software and technology names caught a break.
That is because staples were hit the hardest, with the falling by about 2%. It appears the double-top pattern was confirmed after the ETF fell below the neckline, and a 100% extension of the pattern would suggest the ETF could decline toward the 50-day moving average.
In terms of the S&P 500, the 6,800 level continues to hold and was tested again on Thursday. However, there is a large amount of put gamma at that level, making it a very sticky area. Until it erodes, the market will likely continue to see these failed attempts to break lower.
It does appear that the gamma build may fade, at least for now, by Monday, with the put wall shifting down to the 6,700 level. If that happens, it could open a path for the market to move lower and reduce the likelihood of these end-of-day rallies.
At least based on my own model estimates, the medium-term CTA level appears to be around 6,740. That medium-term flip level has been acting as support beneath futures for the past four trading sessions. This is something new I have been working on and trying to calibrate. If it continues to prove useful, I can share it from time to time.
That’s all I have. I’m kind of tired and have had enough of this week already.
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