Macro Theme:

Key dates ahead:

Founder’s Note:

Futures are up 20bps, with no major data on deck.

For today, support remains at 6,290, and resistance remains at 6,350. A break <6,290 flips us back to “risk off” and we’d look for a test of 6,250. Ultimately we don’t see positioning in place for an extended volatility spike unless SPX breaks <6,200.

There is an alleged tariff deadline tomorrow that some are flagging as a risk. SPX vols into 8/8 definitely show a kink, with those IV’s near 15% and longer dated IV’s closer to 13%. We’re not terribly convinced this matters that much for market risk, as you would think longer dated IV’s would hold higher vol levels if this 8/7 event was such a trigger.

Weighing on things are the semis, with ugly results from AMD (-5% premarket) and SMCI (-16% premarket). Those stocks both had tremendous runs into these results, but through our eyes is a signal of struggling leaderships – with out the semi/AI narrative to lead us then what will? NVDA earnings are not until 8/27, which is also the timing of Jackson Hole (and talk-up of potential rate cuts).

We note SMCI may be approaching short term bottom area <=45 as positioning wanes under there.

From a flows perspective the vols contracted a fair amount – one could argue that IV’s could continue to contract which would be supportive of equities but not a heavy-handed catalyst. The positive clearing of some tariff deals could allow a short term IV contraction, which helps to keep SPX >6,300. Should we slip under <6,290, then we would look to play some downside but things likely don’t get too spicy unless SPX <6,200 as there are very few long buyside puts in the 6,200-6,300 range.

The ultimate take from the ramblings above show that there really is a lack of conviction at this moment and things seem tired. We see this view in the single stock space, wherein the IV’s are all over the map vs consolidated in a bullish or bearish stance. This means we will be on the look for longer term single stock plays if names move to IV/price extremes, while we look for opportunistic intraday mean reversion trades in the indexes (or a directional short <6,290).