Macro Theme:

 

 

Short Term SPX Resistance: 5,100

Short Term SPX Support: 5,000

SPX Risk Pivot Level: 5,000

Major SPX Range High/Resistance: 5,100

Major SPX Range Low/Support: 4,800

‣ 5,100-5,116 (SPY 510) is the likely high into next weeks 5/1 FOMC. We think 4,975 – 5,000 will remain as major support in through FOMC.*

*updated 4/24

 

 

Founder’s Note:

ES +70bps to 5,120. NQ futures +100bps to 17,740.

Key SG levels for the SPX are:

• Support: 5,023, 5,013, 5,000
• Resistance: 5,055, 5,100
• 1 Day Implied Range: 0.61%

For QQQ:

• Support: 428, 425, 420
• Resistance: 430

IWM:

• Support: 195, 190
• Resistance: 200, 202, 205

Both MSFT and GOOGL are higher after earnings (+4%, +11%).

Core PCE 8:30 AM ET.

The “bat signal” that 5,000 would hold yesterday was the lack of higher implied vols into lower prices, and that gave traders the “all clear” to buy yesterday’s dip at 5,000. With that, the SPX is poised to open back into the center of the 5,000-5,100 range that we have been highlighting into Wed FOMC (5/1).

Accordingly, with futures pressing recent highs, we think that call sellers will come in near 5,100. Further, there seems to be a solid pocket of negative gamma zones, as price moves rather fluidly between 5,000 & 5,100. We flag this as a bit of negative news may be the excuse to shove SPX back down toward major 5,000 support.

What is catching our eye here as we move into earnings season is the chip sector. Semis were the leaders for most of ’24, when SMH was +40% YTD into early March. They then had a very rough April, with SMH declining -20% from March highs. Well, suddenly SMH is up 7% from last weeks lows, and the call skew is starting to lift again.

Below we plotted 1-month skew from the massive stock-up, vol-up start-of-March (gray), wherein SMH hit all-time highs of +$236. Compared to that is today (teal), and last weeks lows where SMH tagged $200 (yellow). As you can see, the put-wing has declined back to recent lows (left red arrow, teal line moving to gray), and the call wing has lifted from those April lows (right red arrow). We read this as put selling, and call buying.

We are clearly not at those call-manic March levels, but it does give something bulls to aspire to, if semi earnings come off strong, and the FOMC is benign.