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Stocks finished the day mostly lower but well off intraday lows, after the S&P 500 had been down around 1%. I would not call this a watershed move for the index, but the market did fall on a Treasury bill settlement day, and that is important because it confirms the pattern remains intact for now.
Thursday is the next T-bill settlement day, and we should begin to see significantly higher bill issuance starting next week. If the spring patterns continue to play out, many market participants may find themselves completely offside, with no idea what hit them.
The only thing that appeared to save the market today was the gamma positioning heading into Friday. The 7340-7350 area remains sticky and is likely to provide support through the end of this week. That should change next week once the monthly options expiration gamma rolls off. At the very least, today’s move allowed the gap from May 7 to fill.
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The VIX was also lower on the day. It isn’t often you see this type of spot-down, vol-down session, and I think it supports the idea that today’s rebound from the lows may have been facilitated by put positions being closed out in the S&P 500. The VIX peaked around midday, just as the S&P 500 fell into the gamma support area, and then declined steadily for the rest of the session.
Additionally, the CPI report came in hotter than expected on the core reading, which helped send Treasury yields higher. This pushed the 30-year Treasury yield to around 5.03%, marking its highest close since May 2025.
Right now, the 30-year is at an important level because if it manages to break out from here, it would mean moving above the highs reached in 2023.
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The 10-year Treasury yield also finally cleared resistance and the downtrend around 4.45%. If it follows through on Wednesday, yields could be headed significantly higher, given the importance of completing this multi-year consolidation pattern.
I don’t have much more to add at this point. Once we get through the rest of the week, next week will probably be much more interesting.
Mike
Glossary by ChatGPT
- Core CPI — A measure of inflation that excludes volatile food and energy prices to better reflect underlying price trends.
- Gamma Positioning — Options market exposure that can influence short-term market movement as dealers hedge underlying price changes.
- Monthly Options Expiration — The scheduled expiration of monthly options contracts, often associated with elevated trading activity and shifting market flows.
- Settlement Day — The date on which financial transactions, including Treasury bill issuance, are finalized and cash changes hands.
- Spot-Down, Vol-Down Session — A market environment where stock prices fall while implied volatility also declines, which is relatively uncommon.
- Treasury Bill Issuance — The process by which the U.S. Treasury sells short-term government debt securities to investors.
- Treasury Yield Breakout — A move in bond yields above a significant technical resistance level, often signaling changing market expectations for rates or inflation.
- VIX — The CBOE Volatility Index, commonly referred to as Wall Street’s “fear gauge,” which measures expected market volatility.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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