I’m Watching For Captain Chaos.

Uncle Dow is making a run for new all-time highs. It seems like weeks ago, which it was, when I suggested that all the indexes need to pop that new all-time high from the April rally lows before we could even consider another healthy corrective move.

That NATH is ticks away from happening on the futures in the premarket.

Two possibilities may occur from here. Gap higher NATH, all the indexes make a run for the border like they are doing a remake of Cannonball Run with Burt Reynolds-esque moustaches and hats to boot. Which leads me into the second choice in that we could see that NATH get nipped and then we see Captain Chaos appear – dun dun duuuuur – rising the bear train.

Or secret door number 3. Pop higher with nitro boosters, fake in the novice bulls, and then Captain Chaos appears for a little bit of fooled-you action.

We will see.

SPX swing still pushing bullish and we now have another BB upper-band tag. No pulse bars in sight, which is really highlighting the lack of conviction to close at extremes in any of the 30-minute segments. The %R is suggesting a stronger bullish move still although flirting with exiting that reading. MACD-v has completely flat moments so we know the range of movements are compressing still.

GEX looking completely bullish again. Low volatility is to be expected or to continue, with the upper ceiling and pin now being 7,500 and 7,450 the next node of interest.

RUT, the current charting darling, is simply gliding across the charts. The bullish Tag ‘n Turn swing remains active, a strong %R trend reading, and MACD-v is at a bullish extreme which does suggest there is a wee bit more to the move. Caution is to be had on bear Tag ‘n Turns until we are firmly out of the bull extreme.

BTC continues to dither. The bull setup is looking more like a bear flag for the moment – but as always we only know these things after the fact. The setup continues to be active despite the price action behavior. It may be a case of kill the setup early prior to a full stop loss being reached and wait for a new entry setup.

In all cases, time as always will tell all.

Market Briefing:

Friday 22 May – Michigan Sentiment final at 10:00 ET. Uncle Dow on the NATH doorstep.

• Thursday closed: SPX 7,445.72 +0.17% / Dow 50,285.66 +0.55% / VIX 16.77 / Russell 2000 +0.93% (the rotation tell)

• Nvidia after-hours: $81.6B revenue vs $78B consensus / $80B buyback / dividend hike / stock -1.26% (third beat, third sell)

• FOMC minutes hawkish: December hike odds repriced to 50% / 10-year settled 4.57% / curve steepened 6bp

• Walmart beat. Home Depot and Target landed in-line. Intuit cut 17% of workforce and the market called it company-specific

• Premarket snap: ES +0.31% / NQ +0.51% / YM +0.26% / RTY +0.40% – all four within touching distance of NATHs

• Today’s catalyst: final May Michigan Sentiment 10:00 ET. Decides whether the week’s calm was prescient or merely scheduled

Market Snapshot

• ES: 7,490.50 / +23.50 (+0.31%) / NATHs 7,540 / ticks from a NATH print

• YM: 50,537 / +133 (+0.26%) / level 50,611 / Uncle Dow on the doorstep

• NQ: 29,605.75 / +150.25 (+0.51%) / NATHs 29,782 / Nvidia’s after-hours digestion hasn’t held the index back

• RTY: 2,858.40 / +11.40 (+0.40%) / NATHs 2,918.40 / the charting darling continues

• GC: 4,524.50 / -19.70 (-0.43%) / haven bid trimmed again

• CL: 98.34 / +0.34 (+0.35%) / Hormuz still closed but oil refusing to react

• VIX: 16.77 / +0.02 (+0.12%) / settled, almost suspiciously

• BTC: 77,244.07 / -303.55 (-0.39%) / dithering

• 

  Tag ‘n Turn

  SPX bullish swing still pushing with another BB upper-band tag and no pulse bars – the lack of conviction is the tell. RUT bullish TnT swing remains active with %R and MACD-v both at the bullish extreme. BTC’s bull setup is looking more like a bear flag despite the setup still being active.

  Three instruments, three different readings of the same momentum question. The SPX is climbing without conviction. The RUT is climbing with everything firing. The BTC is hesitating with the setup live but the price action lagging. Friday’s session decides which of those three pictures is the lead and which two are the lag.

  SPX Analysis

  Swing still pushing bullish. Another BB upper-band tag, no pulse bars in sight. The lack of conviction to close at extremes in any 30-minute segment is the configuration to watch. NATHs at 7,517.12 the immediate magnet, with the futures already past it.

  The daily picture remains bullish thesis above range. The 30-minute is where the tension lives. Price has tagged the upper Bollinger Band again and the AV-Pulse indicator has not produced a single bullish pulse bar on any of the closes at the extreme. Closes at the band without confirmation are the configuration that often precedes either a melt-up consolidation or the false-break setup flagged as the third secret door.

  The W%R at -16.60 is suggesting a stronger bullish move is still in play, although it is flirting with exiting that reading – the next print at the upper band could either drive it deeper into bull-extreme territory or roll it over. The MACD-v has completely flat moments through the recent sessions, which tells you the range of movements is compressing rather than expanding. Quiet bull markets often look exactly like this just before they break one way or the other.

  NYSE ADV-DECL at 95 – mildly positive but nothing like the breadth thrust Wednesday produced. Breadth is supporting but not driving.

  Current Status: Bullish Above (Flipped) 7,267.09 / PFZ 7,231.3 / Target Pending

Gamma Exposure

GEX looking completely bullish again. Gamma flip 6,811.83, well below cash. Put wall 7,400, call wall 7,500. IV at 14.03% with IV Percentile 50%. Low volatility is to be expected or to continue.

The flip point sits roughly 634 points below cash. That is deep positive gamma territory – dealers happy to sell rallies and buy dips, which is what produces the quiet upward drift. Both walls have moved up since yesterday, with the call wall lifting from 7,400 to 7,500 and the put wall holding at 7,400.

The upper ceiling and pin now being 7,500 and 7,450 the next node of interest. That is the pull above current cash, and it is also the level where the dealer hedging dynamic could begin to act as resistance into the close on a Friday with no major scheduled catalyst beyond Michigan Sentiment.

IV Rank at 21.50% and IV Percentile at 50% – vol is sitting at the median of its 12-month range. No tail-risk pricing. No event premium. The market believes nothing surprising is coming.

Current Status: Flip 6,811.83 / Put Wall 7,400 / Call Wall 7,500 / IV 14.03% / HV 10.65% / IVR 21.50% / IVP 50%

RUT Analysis

The current charting darling is simply gliding across the charts. Bullish Tag ‘n Turn swing remains active. Strong %R trend reading. MACD-v at a bullish extreme suggesting a wee bit more to the move. Caution on bear TnTs until firmly out of the bull extreme.

This is the chart still doing the work. The Bullish TnT signal printed at the recent low has carried price up cleanly through the PFZ Flip annotation and back above the 2,812 trigger on the info box. The Bearish TnT annotation at the top of the recent move is on the chart, but the same caution applies elsewhere applies here – you do not act on a bear TnT inside a still-active bull extreme.

The MACD-v histogram is at the bullish extreme zone. The W%R at -6.73 is also buried in the bullish extreme. Both of those readings, on a bullish swing, are saying the move has more in it before momentum decides to take a breath. The NYSE breadth at 95 is supporting rather than driving.

NATHs at 2,888.62 is the next overhead level. The PFZ Level at 2,801.11 is the structural support.

Current Status: Bullish Above (Flipped) 2,812 / PFZ 2,801.11 / Target Pending

BTC Analysis

Continues to dither. The bull setup is looking more like a bear flag for the moment – but as always we only know these things after the fact. The setup continues to be active despite the price action behavior. It may be a case of kill the setup early prior to a full stop loss being reached and wait for a new entry setup.

The entry sits at 77,377.03 with the stop loss at 75,850.00. The bull swing target overhead at roughly 83,000. The %R is annotated as “Exiting Bear Trend” on the chart and the MACD-v is annotated as “New Bull Trend” – those are the system reads.

What the price action is doing, separately from the system reads, is the bear-flag concern. The recent push higher has not been able to clear the 78,000 area cleanly and the candles are sitting in a small descending channel that could be either consolidation before the next leg up or a continuation of the broader downtrend dressed up as a pause.

The honest read on this chart: setup is active, price action is not confirming, and the asymmetry between waiting for the stop loss to hit and pre-emptively closing the trade is starting to favor the pre-emptive close.

Current Status: Entry 77,377.03 / Stop 75,850 / Bull Swing Target ~83,000 / setup active but price action lagging

Rounding Off

Three Beats. Three Sells. The Bellwether Has Stopped Behaving Like One. Nvidia delivered $81.6B revenue against $78B consensus, an $80B buyback, and a dividend hike. The stock fell 1.26%. That is three consecutive earnings beats answered with the same answer. The AI bellwether that carried roughly a fifth of the S&P 500’s 2026 advance has quietly stopped behaving like a bellwether. Russell 2000 doing the structural work on the rotation tell. The premarket has the broad indexes all within touching distance of new all-time highs without the Nvidia engine driving the bus.

The NATH-Or-Captain-Chaos Question. ES sits roughly 50 points off the all-time high. Uncle Dow is on the doorstep. The lack of pulse bars at the SPX upper band is the chart’s way of saying I am not convinced yet. The third secret door flagged – pop higher with nitro boosters, fake in the novice bulls, then Captain Chaos – is the configuration most consistent with low vol, compressing MACD-v ranges, and three Nvidia beats that nobody wants to buy. Today’s Michigan Sentiment final is the only scheduled catalyst between here and the close.

Expert Insights

The 2026 advance in the S&P 500 has been disproportionately carried by a handful of mega-cap names with Nvidia at the front. Russell 2000 outperforming at +0.93% on a day when Nvidia sold is the rotation tell Farrell’s Rule 7 is built to read. Either the breadth lifts and the index goes broader from here, in which case the move has another leg, or the breadth fails to confirm and the narrow leadership exhausts itself, in which case Captain Chaos is the more likely outcome of the two doors flagged.

This is not a prediction. It is a setup of the two paths, with the rotation print on Russell as the early tell of which one is winning the argument. The job is to read the breadth confirmation rather than insist on the index direction.

[Source: Bob Farrell’s 10 Market Rules to Remember, widely cited in CFA Institute literature and Merrill Lynch research, public]

Fun Fact:

The Cannonball Run film (1981) was based on the real Cannonball Baker Sea-To-Shining-Sea Memorial Trophy Dash, organized by Brock Yates of Car and Driver magazine starting in 1971. The first race was won by Yates himself with Dan Gurney, driving a Ferrari Daytona from New York to Los Angeles in 35 hours 53 minutes.

The real-world cross-country record has been broken many times since. The 2,800-mile route now sits well under 27 hours. The race in the film, the moustaches, the hats, and Captain Chaos himself – all built on a genuine 1970s tradition of treating the American interstate as a private circuit.

[Source: Car and Driver / Brock Yates, Cannonball! World’s Greatest Outlaw Road Race, public]

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