SPX Sees What Mars Looks Like. MACD-V Divergent. Histogram Says Momentum Fading.

SPX and NazQuack continue to see what Mars looks like, while Uncle Russell screams wait for me. Sleepy Uncle Dow is enjoying a nap in the rocking chair.

Over on the swing setup, we can see price is simply chugging along nicely. We are seeing the MACD-V look divergent and we are now out of the continuation threat window with the MACD-V extreme. There is also a significant reduction in momentum as seen in the histogram.

Maybe it is time we do indeed see a small corrective move. Stop laughing. It is possible.

RUT is behaving a little more normally back and forth and now showing a new fresh bear Tag ‘n Turn setup.

I’m back at the desk proper, so just looking to get the swings rolling and I’ll ease myself back into the new week a little slowly.

In the wider world: CPI at 8:30 ET. Consensus 3.7%. Cleveland Fed nowcast 3.56%. Wells Fargo 3.8%. Whichever way it prints, hottest read since 2023. Trump called Iran’s latest peace offer “totally unacceptable” Sunday night. Warsh sworn in Friday and inherits stagflation. Markets, on the whole, prefer not to think about it.

Market Briefing:

Tuesday 12 May.

• Monday cash: SPX 7,412.84 ATH on 37.8% breadth / NazQuack 26,274 / RTY 2,868 cleared “out of politeness” / Dow flat

• Tuesday pre-market: ES 7,411.50 (-0.32%) just under Monday’s NATH 7,454.75 / NQ 29,223 (-0.60%) / RTY 2,870 (-0.32%) NATHs 2,918.4 above / YM 49,739 (-0.14%)

• 30-minute SPX: Bullish (Flipped) above 7,267.09 / NATHs 7,428.97 / MACD-V divergent vs price / histogram momentum noticeably reduced / out of continuation threat window

• 30-minute RUT: fresh Bearish Below 2,881.69 / PFZ 2,888.21 / Target 2,825.30 / Bearish TnT just printed

• CPI 8:30: consensus 3.7% / Cleveland Fed nowcast 3.56% / Wells Fargo 3.8%

• Brent $104 / WTI ~$99 / Hormuz remains shut / Aramco CEO: market losing 100M barrels per week

• Trump: Iran peace offer “totally unacceptable” / ceasefire on “massive life support”

• Warsh sworn in Friday / inherits stagflation

• Memory/semis: Roundhill Memory ETF +30% in 5 sessions / Micron +15% on HBM AI orders

• This week earnings: Cisco Wednesday (~$14B rev, $0.92 EPS) / Alibaba Wednesday / Applied Materials Thursday (8.7% options-implied move)

• 10Y firmer into print / Gold $4,710.50 / DXY bid

• GEX: 7,400 dominant anchor / 7,500 secondary spike / Call wall 7,400 / Put wall 7,000 / IV 15.26% / IVP 70%

Market Snapshot

• ES: 7,411.50 / -0.32% / under Monday NATH 7,454.75

• YM: 49,739 / -0.14% / Uncle Dow napping

• NQ: 29,223 / -0.60% / pre-CPI giveback

• RTY: 2,870 / -0.32% / NATHs 2,918.4 above

• GC: 4,710.50 / -0.74% / off recent fresh high

• CL: 101.12 / +2.92% / Aramco math

• VIX: 18.91 / +2.94% / firming into print

• BTC: 80,778 / -1.16% / range still in place

Tag ‘n Turn

SPX: Bullish swing intact. MACD-V divergent. Histogram momentum reducing. Out of continuation threat window. Small corrective move possible.

RUT: Fresh bear Tag ‘n Turn just printed. Bearish Below 2,881.69. Target 2,825.30.

The SPX bullish swing is still on but the MACD-V is now divergent and the histogram has lost meaningful momentum. We are out of the continuation threat window. Conditions for a small corrective move are now present. Stop laughing.

RUT is the cleaner setup today. Fresh bear TnT just printed with PFZ Flip and target at 2,825.30. First proper directional setup of the week.

CPI at 8:30 is the binary that decides whether either move runs.

SPX Analysis

Bullish (Flipped) above 7,267.09. NATHs 7,428.97 at the upper boundary. MACD-V divergent from price. Histogram shrinking. Out of continuation threat window.

The bullish swing is intact and the chart has continued to push higher off the 7,267 flip. The Bullish (Flipped) status sits above 7,267.09 with PFZ Level at 7,231.3.

The internal read has changed though. MACD-V is now showing divergence against the new highs. The histogram bars have noticeably shrunk versus the previous extreme. We are out of the continuation threat window. The structural support for the past six-weeks “push-extreme-tiny-woosh” pattern is loosening.

A small corrective move is now genuinely on the table for the first time in weeks.

Current Status: Bullish (Flipped) above 7,267.09 / PFZ 7,231.3 / Target Pending / NATHs 7,428.97 / MACD-V divergent / histogram shrinking

Gamma Exposure

7,400 dominant anchor. 7,500 secondary spike. Range development 7,400-7,500. Call wall 7,400.

The GEX field has migrated up again. 7,400 is now the dominant gamma node and the call wall. 7,500 is the next major spike above. The 7,300-7,400 range from last week has resolved upward.

Put wall 7,000. Gamma flip 6,598.04. IV 15.26% / IVP 70% / IV Rank 29.32% / HV 12.60%. IV firming into CPI as expected.

RUT Analysis

Bearish Below 2,881.69. Bearish TnT just printed. PFZ 2,888.21. Target 2,825.30. First proper directional setup in days.

RUT is behaving normally again — back-and-forth chop rather than the relentless straight line of SPX. The chart has printed a fresh Bearish TnT and the system has developed anew bear swing setup, bearish below 2,881.69.

PFZ Level sits at 2,888.21 just above. Target 2,825.30 below. This is the first setup in days that does not need permission from the broader index.

Current Status: Bearish Below 2,881.69 / PFZ 2,888.21 / Target 2,825.30 / NATHs 2,888.61

Rounding Off

The CPI binary. Wall Street consensus 3.7%. Wells Fargo 3.8%. Cleveland Fed nowcast 3.56%. Whichever prints, hottest read since 2023, and the room has spent six weeks pricing the opposite. The tape held its breath into the 8:30 print.

Hormuz still shut. Aramco’s CEO observed the market is losing 100 million barrels each week. Brent $104. WTI $99. Trump called Iran’s latest peace offer “totally unacceptable” Sunday night. Ceasefire on “massive life support.”

Memory and semis carry the bid. Roundhill Memory ETF +30% in five sessions. Micron +15% on HBM AI orders. Memory is the leadership concentration story this week, the way the AMD/SMCI/Corning cluster was last week.

Warsh Friday. Sworn in and inherits stagflation. The Senate vote earlier this week confirmed the path. Powell holds the gavel for one more meeting.

The week. Cisco and Alibaba report Wednesday. Applied Materials Thursday with options pricing an 8.7% implied move. Already busy before the data prints.

Current Status: CPI 8:30 the binary / SPX MACD-V divergent / RUT fresh bear TnT / oil firm / Warsh Friday

Expert Insights

Records on 37.8% breadth. Two-thirds of stocks sat the high out. The MACD-V is divergent. The histogram is shrinking. The CPI consensus is the hottest since 2023. Every input points the other way and the chart, having considered the facts, has ignored them.

The comfortable trade today is to ride what is working. The uncomfortable trade is to size the fresh RUT bear setup and accept that the SPX bullish swing may also turn at the same time.

Ease in slowly. Trade the setups. Let CPI move what it moves.

[Source: Robert Arnott, Research Affiliates public commentary |
BLS CPI release schedule, public |
Federal Reserve Bank of Cleveland Nowcasting, public]

In Other News…

The room held its breath. 37.8% of stocks held it for the room.

Monday’s all-time high closed at 7,412.84 with two-thirds of US issues sitting it out. Records achieved by professional courtesy. The Nasdaq joined. The Russell cleared 2,868.58 “mostly out of politeness.” The Dow napped through the ceremony.

At 8:30 ET, April CPI. Hottest read since 2023 whichever model prints. The room has spent six weeks pricing the opposite. The tape, having considered the print, has decided to peak first.

Oil decided to participate. Brent $104. WTI near $99. Aramco’s CEO explained gravity to a politician: the market is losing 100 million barrels each week. The Strait of Hormuz remains shut. The president called the latest peace offer “totally unacceptable.” Ceasefire on “massive life support.”

Memory ETFs +30% in five sessions. Micron +15% on HBM AI orders. The new cluster leadership is in storage, not compute. Cisco and Alibaba Wednesday. Applied Materials Thursday with options pricing an 8.7% move.

Kevin Warsh sworn in Friday. Inherits stagflation. Markets prefer not to think about it.

Trade well,
T2 Markets

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