All Four Indexes Now N Sync.

Another post-long-weekend successfully navigated. The premarket index futures are suggesting peace has been negotiated and the Strait of Hormuz is open. The reality is still 180 degrees in the opposite direction.

The only thing worth noting from the charts and my eyeball mark 20:20 is that all four stock indexes are now ‘n sync. The only question is will the new all-time high go bye bye bye – let’s just hope it doesn’t end with cry me a river (of bears).

Oil is reacting off its rising channel lows and we could see a push back to the $110 zone if the range theme continues.

BTC on the daily is finding support at the longer-term anchored VWAP and what could well be an inverted head and shoulders developing – either way, price is pinching between the rising and descending VWAPs which is clearer to see on the 4-hour charts.

SPX and RUT swings are going to be interesting at the official open. In both cases the swings set up a nice bear swing entry – so it’s going to be interesting to see if we hold what could be a gap higher to void the bear swings or if we see prices come back to Friday’s range. If it’s the latter then a profitable exit can be had as the time decay is doing its thing nicely.

The big GEX anchor point is 7,500 again so I’d imagine we see the gap higher and price push lower back to this level allowing for the swings to lighten the load, as the dealers potentially defend this level.

We will of course see what we see when we see it.

 Market Briefing:

Tuesday 26 May – post-Memorial-Day reopen. Wall Street came back convinced peace happened.

• Friday closed: SPX 7,473.47 +0.37% (record) / Dow 50,579.70 (record) / Russell +1.00% / Brent -4.06% to $96.14

• Premarket snap: ES +0.62% to 7,530.50 / NQ +0.88% / YM +0.61% / RTY +1.27% / VIX 16.81 (faint skepticism the only one paying attention)

• Brent down 9% on the month / Hormuz vessel count 21 vs pre-war norm 60 / Iran framework still unsigned

• Warsh sworn in Friday as 17th Fed Chair on a 54-45 vote, the narrowest margin on record

• Today’s catalysts: Consumer Confidence 10:00 ET / AutoZone premarket

Market Snapshot

• ES: 7,530.50 / +46.25 (+0.62%) / NATHs 7,569.75 / gap higher pushing new highs

• YM: 50,930 / +307 (+0.61%) / NATHs 51,209 / Uncle Dow in record territory

• NQ: 29,781.25 / +260.50 (+0.88%) / NATHs 29,995 / tech in sync

• RTY: 2,901.70 / +36.50 (+1.27%) / NATHs 2,922.70 / the leader yet again

• GC: 4,525.00 / +14.50 (+0.32%) / haven bid trimmed but holding

• CL: 92.73 / -4.27 (-4.40%) / third session pricing peace below $97

• VIX: 16.81 / +0.10 (+0.60%) / faint scepticism

• BTC: 76,704.98 / -544.09 (-0.70%) / dithering at the anchored VWAP

Tag ‘n Turn

SPX and RUT both printed bear swing setups at Friday’s close. Premarket gap higher across all four indexes would void them. If price returns to Friday’s range, the swings work out and time decay does the rest. The 7,500 GEX anchor is the question that resolves both possibilities.

This is the cleanest TnT setup of the week. Two live bear swings, a gap higher trying to void both, and a massive dealer-defended level sitting at exactly the price the swings need to come back to for the trade to work. The official open will tell.

SPX Analysis

Bear swing setup printed at Friday’s close. Bearish TnT signal on the chart top-right. Bearish Below 7,472.88, PFZ Level 7,506.32, Target 7,383.27. Premarket gap higher would void the swing if it holds above the PFZ.

The Bearish TnT signal printed on the 30-minute as price closed Friday at 7,473.48 – sitting just 0.60 above the bearish trigger. The PFZ Level at 7,506.32 is the line that decides whether the swing is voided or active. ES at 7,530.50 in premarket is currently above the PFZ, which would void the trigger if the cash open holds it.

The W%R at -28.11 has rolled off the bullish extreme. The MACD-v is flattening rather than driving. The BBW + Pinch Points indicator continues to show the compression

The configuration is the gap-higher-or-retest setup. Either the gap holds and the bear swing is voided clean (in which case the system stays out), or price pushes back through 7,506.32 toward the 7,500 GEX anchor and the swing is back in play with target 7,383.27 below.

Current Status: Bearish Below 7,472.88 / PFZ 7,506.32 / Target 7,383.27

Gamma Exposure

The big GEX anchor point is 7,500 again. Gamma flip 6,793.01, well below cash. Put wall 7,400, call wall 7,500. Massive call gamma node at 7,500 visible on the chart. IV 15.08%, IVP 67%.

The 7,500 call wall is the headline today. The call gamma node at that strike is roughly 2x any other strike on the board – dealers are heavily exposed at this level and any push higher into 7,500 will be met with hedging flow that typically caps the move.

The flip point at 6,793.01 sits roughly 680 points below cash. Deep positive gamma territory. The structural backstop is intact.

IV at 15.08% against historic 10.57% is slightly elevated relative to last week. IV Percentile at 67% says the market is pricing slightly more uncertainty than usual into the post-holiday open. That tracks with the gap-higher-into-record-territory configuration.

Current Status: Flip 6,793.01 / Put Wall 7,400 / Call Wall 7,500 / IV 15.08% / HV 10.57% / IVR 28.16% / IVP 67%

RUT Analysis

Bear swing trigger live. Bearish Below 2,872.04, PFZ 2,878.61, Target 2,790.46. Cash closed Friday at 2,869.22 – inside the bearish trigger. RTY futures at 2,901.70 in premarket would void the swing if the cash open holds above the PFZ.

The Bearish TnT annotations on the 30-minute show the signal printing as price rolled off the upper band on Friday afternoon. The Friday cash close at 2,869.22 sits below the 2,872.04 trigger, making the bear swing active on the close.

The premarket gap is more aggressive on RUT than on SPX. RTY at 2,901.70 is well above both the 2,872.04 trigger and the 2,878.61 PFZ – if the cash open holds anywhere near that level, the swing voids and RUT continues its run as the leader.

The W%R at -11.68 is buried in the bullish extreme. The MACD-v histogram is still in positive territory but rolling. The same gap-or-retest read applies as on SPX, with the asymmetry favoring the voided-bear-swing outcome on the cash open if futures hold their gains.

NATHs at 2,888.62 is the level RTY is currently trying to take out. Above that and the leadership thesis continues to print.

Current Status: Bearish Below 2,872.04 / PFZ 2,878.61 / Target 2,790.46

BTC Analysis

BTC on the daily is finding support at the longer-term anchored VWAP and what could well be an inverted head and shoulders developing. Price is pinching between the rising and descending VWAPs which is clearer to see on the 4-hour charts.

The daily picture is more constructive. Price is sitting on the longer-term anchored VWAP, which is the kind of level where significant decisions get made. The potential inverted head and shoulders pattern would target a move back toward the 80,012.78 anchor level and beyond if it completes.

The 1-hour shows price pinching between rising and descending VWAPs – the compression visible on the 4-hour in a tighter timeframe. This is the configuration that often breaks one way or the other quickly once the resolution arrives.

CL Analysis

Oil is reacting off its rising channel lows. A push back to the $110 zone is possible if the range theme continues.

CL futures at 93.34, down 2.84% on the session and roughly 9% on the month. The daily chart shows price now testing the lower boundary of the rising channel that has framed Brent’s behavior since March. Three consecutive sessions of pricing the peace deal that has not been signed has brought price to a level where the next move decides whether the channel continues or breaks.

If the rising channel holds, the technical setup favors a move back toward the channel midline ($100-105) and potentially the upper boundary ($110+). If the channel breaks, the next structural level sits at the 200-day moving average around $82-85.

The fundamental backdrop has not changed in three weeks. Hormuz vessel count is 21 against a pre-war norm of 60. The deal has not been signed. The tape disagrees with the shipping data. One of them is wrong.

Current Status: Lower channel boundary live / $110 upside target if range holds / $82-85 downside if channel breaks

Rounding Off

Wall Street Came Back Convinced Peace Happened. Trump announced a “framework” Iran deal Saturday evening – “largely negotiated” through Pakistan-mediated talks – while US markets were closed for Memorial Day. By the time the tape reopened this morning, the consensus had already been reached. ES gap higher, Brent down 9% on the month, defense names watched for the unwind. The shipping data still reads blockade. Tuesday’s open will reconcile the two and the bear swing setups on SPX and RUT are the chart’s way of asking which version of the story wins.

The Warsh Vote In The Background. Kevin Warsh was sworn in Friday as the 17th Fed Chair on a 54-45 vote, the narrowest margin on record. He inherits 3.5% headline PCE, 14.4% year-on-year energy inflation, and a 30-year yield at a 19-year high. Markets are still pricing hold through 2026 and consumer confidence prints today at 10:00 ET. The peace trade meets the calendar this week. The calendar tends to win these encounters.

Expert Insights

The peace trade is currently far ahead of the shipping data. If the framework gets signed in the next few weeks, today’s premarket gap is correct and the Friday-close bear swings void cleanly. If the framework follows the historic average for Iran-related diplomatic agreements – measured in quarters rather than days – today’s gap is a textbook example of the trade Marks describes.

The chart asks Marks’s question without committing to either answer. The 7,500 GEX anchor is the level that will mark which version of the story the dealer hedging community is paid to defend. The job is to read the answer rather than supply one in advance.

[Source: Howard Marks memos, Oaktree Capital Management, www.oaktreecapital.com, public]

Fun Fact:

“Bye Bye Bye” by NSYNC was released on 17 January 2000 as the lead single from their album No Strings Attached. The album went on to sell 2.4 million copies in its first week of release – a US first-week sales record that stood for fifteen years until Adele’s 25 broke it in November 2015.

The Justin Timberlake solo follow-up “Cry Me a River” was released in November 2002, written and produced by Timbaland and Scott Storch. The song was famously about a high-profile breakup. The video featured a Britney Spears lookalike. The 2002 tabloid press declined to print a denial.

The NATH-or-cry-me-a-river framing borrows two number-one US singles separated by 22 months and one very public personal grievance. The market grievance, should the bear swings activate from Friday’s range, would print on a similar timeline.

[Source: Billboard chart history / RIAA certifications, billboard.com and riaa.com, public]

Trade well,
T2 Markets

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