Peace Breaks Out And The Tape Gaps Straight To Records

Woosh. The markets gapped higher and ran higher, Wall Street ended the war and priced it like a tax cut, Trump called it complete, and we start the week with a full bingo card.

The markets are loving it, and perhaps we can get back to some normal price behaviors after this round of excitement.

Pre-market the index futures are making a run for new all-time highs. Uncle Dow, check. Uncle Russell, check. NazQuack and the S&P closing in on theirs.

Gold is loving it too, reacting nicely off the prior hard sell-off low, with intraday higher lows showing. I would like to see a daily higher low or the VWAP lines reclaimed, and then I will start looking at buying the strength.

BTC is bullish through the trigger I marked off last week. The initial small position is on and I will look to add on corrective moves, on what could be the start of the next altcoin cycle higher. Thingamajig.

The Williams %R is also showing a bullish extreme, which flagged off last Thursday and continues to stay in the extreme on this break through my bull trigger. So ideally that state will continue as we kickstart into what could be a nice bull swing, similar to the bear swing with the same bear extreme showing on the last down leg.

CL continues to be bearish, and with a little hindsight it was a clear canary in the coal mine. Only with hindsight though, and I claim no cleverness. The chart was saying lower and we are profiting from said lower moves.

GEX is back in positive territory and I would expect the whole options landscape to change dramatically as the market opens.

Uncle Russell’s bulls keep bulling. We do have a MACD-v extreme on Friday and a new bear Tag ‘n Turn, which means we can continue to ignore it. With the gap higher overnight holding into the main session, that should make it a moot point anyway.

The Premium Popper software update has been completed and rolled out. The Tag ‘n Turn software that automates the new strategy updates and improvements, plus a scoring engine, is now next on the bench. This one is a major overhaul, 30+ new inputs and assessments all being weighed up behind the scenes for you.

It’s going to be a fun week for sure.

PopPop

Market Briefing:

• A peace framework ends the 14-week war and reopens the Strait of Hormuz, and every index gapped risk-on into the cash open.

• Oil unwound the supply premium hard, CL down 4.48% to 80.40, which dropped it straight through its bear target.

• The VIX collapsed 5.66% to 16.67, back within touching distance of the 13.38 year low, classic gap-and-go conditions.

• Gamma is back positive (Friday’s flip at 7,381.28, last 7,431.46), so the dealer landscape that pinned Friday re-draws on the open.

• FOMC Wednesday with Warsh is the week’s real pivot, the gap either holds around it or fills.

• Friday is Juneteenth, US markets are shut, and the signing lands that day, so the headline event of the week is the one nobody can trade.

Market Snapshot

• ES (S&P 500): 7,591.50 / +2.09% / gapping for NATHs at 7,632.25, bullish

• YM (Uncle Dow): 52,068 / +1.62% / pressing the 52,161 NATHs, check

• NQ (NazQuack): 30,591.25 / +3.08% / leading the charge, NATHs 30,807.75 in sight

• RTY (Uncle Russell): 2,995.7 / +1.58% / NATHs 3,002.1 right there, bulls bulling, new bear TnT being ignored

• GC (Gold): 4,356.9 / +2.76% / off the hard sell-off low, intraday higher lows, waiting on a daily higher low or a VWAP reclaim before I buy strength

• CL (Crude): 80.40 / -4.48% / bearish, the canary, bear target done, channel BO target sits at 65.00

• VIX: 16.67 / -5.66% / crushed back toward the 13.38 year low

• BTC/USD: 65,614.81 / bullish through the 64,234.45 trigger, Williams %R at a bull extreme, MACD-v on a new bull trend

Tag ‘n Turn

The directional read is about as one-sided as it gets this morning, with one deliberate exception. SPX is bullish and carrying a lottery ticket that pays off either way the tape breaks. BTC has flipped bullish through my trigger and is reading a fresh bull trend on the lower chart. CL stays bearish and is simply doing what it has been doing, working lower.

The lone bit of tension is Uncle Russell, where a new bear Tag ‘n Turn printed alongside Friday’s MACD-v extreme. On any other tape that earns a second look. This morning the overnight gap higher overruns it, so I am content to ignore the bear and let the gap do the talking.

SPX Analysis

SPX remains bullish and the BO target at 7,400 has already been reached, with the cash at 7,431.45 and the NATHs above at 7,620.90. The Tag ‘n Turn levels sit at Bullish Above 7,363.68, and Target 7,411.32. The weekly expected move is modest at 54.06 points (0.73%), framing a 7,377.40 to 7,485.52 box on 14.02% implied.

Gamma Exposure

Friday’s close put the gamma flip at 7,381.28, with the put wall at 7,400.00 and the call wall at 7,500.00. The cash at 7,431.46 sits above the flip, which is the positive-gamma shelf. Implied volatility reads 15.01% against historic at 13.79%, with IV Rank at 27.72% and IV Percentile at 66%.

Back in positive territory, the landscape redraws at the open.

RUT Analysis

Uncle Russell’s bulls keep bulling, with the NATHs at 2,969.43 and price knocking on the door after the overnight gap. The new bear Tag ‘n Turn reads Bearish Below 2,940.83, with the broader BO target still marked at 2,810.

Friday delivered a MACD-v extreme to go with that bear tag, the kind of pairing that would normally make me cautious. The system says to ignore it. With the gap higher holding into the main session, I am treating both as moot and staying with the bulls.

Bulls keep bulling, the gap makes the bear moot.

BTC Analysis

BTC is bullish through the 64,234.45 trigger I marked off last week, with price at 65,614.81 and the lower edge of the cyclical turning-point zone down at 58,500.00. The chart is flagging a potential cyclical bull turning point, the Williams %R is sitting in a bull extreme that first flagged last Thursday and has stayed there on the break, and the MACD-v has rolled into a new bull trend. The initial small position is on. I will add on corrective moves rather than chase, on what could be the start of the next altcoin cycle higher.

Bullish through the trigger, adding on corrective moves.

Rounding Off

The chart gapped because the war ended. A peace framework closed out the 14-week conflict and reopened the Strait of Hormuz over the weekend, the oil risk premium drained, and crude fell 4.48% to 80.40, straight through the bear target we have been working. The VIX was crushed to 16.67 and every index gapped toward records. That is the whole reason the tape looks the way it does this morning, and it is why CL finally paid for the lower read.

The week pivots on Wednesday, not on the headline. FOMC with Warsh is the next gate, and the gap either holds around it or fills. Then Friday is Juneteenth, US markets are closed, and the deal is due to be signed that day. The single biggest event of the week is the one nobody can put a trade on, so the read into Wednesday is what matters.

Expert Insights

Bernard Baruch, the financier who advised presidents, liked to puncture the fantasy of perfect timing:

It lands today precisely because the temptation is everywhere. A war ends, the tape gaps, and the urge is to chase the exact print as though the bottom were always obvious. It was not. The nuance is that none of my morning moves are bottom-or-top calls. Gold has to give me a daily higher low or a VWAP reclaim before I touch it. BTC gets added to on corrective moves, not at the high. Crude was a chart that said lower, banked with no cleverness claimed. Baruch’s point is the system’s point: you do not need the extreme, you need the trigger.

Bernard Baruch – widely attributed, public domain.

Fun Fact:

I called crude the canary in the coal mine this morning, so here is where the phrase actually comes from. British miners really did carry caged canaries underground to flag afterdamp, the carbon monoxide that lingers after an explosion, odorless and colorless and otherwise impossible to detect.

The birds were roughly 20 times more sensitive to the gas than a person, so a swaying, silent canary bought the miners just enough warning to get out. Britain only retired the practice in December 1986, replacing more than 200 birds with an electronic detector nicknamed the “electronic nose.”

The canary stopped being equipment and became a metaphor, which is the version I was reaching for when crude started fainting on its perch days before anyone else noticed.

[Source: Smithsonian Magazine – “What Happened to the Canary in the Coal Mine?” – smithsonianmag.com]

Trade well,
T2 Markets

p.s. Want full access to the SPX Income System (includes 7+ mechanical income strategies)? Join our team now!

p.p.s. Want funding to DAY TRADE our options strategies? Discover how you can start trading with up to $250k of RISK FREE capital!