The Trap Door Sits At 765

Brandon Chapman spent today watching a single number hold this market together. SPY 765 absorbed every bit of selling pressure and refused to crack.

That level is a put wall. It acted as support through the entire session.

The market faded straight into it after Friday’s Warsh statement. Then it lifted late to roughly 767.

Here’s the part that matters for the rest of the week. The open interest parked at 765 keeps growing.

Brandon counts 63,000 contracts stacked at that strike. That’s negative gamma territory, and the pressure sits to the downside.

Friday’s expiration is the pressure point. Even if the 27,000 contracts sitting there all close out, more than 30,000 remain behind.

Above 765 the level cushions the tape. Below it, gravity takes the wheel.

Brandon sees almost no call interest underneath to slow a break. The market can fall under its own weight toward 760 and beyond.

He put money behind that thesis today. His SPY put vertical looked for the break, and the level held, so the position expired out.

The Fed is adding fuel. Odds of a rate increase at the next meeting sit at 65%, up from 41% a week ago.

Brandon read Warsh’s statement as a full pivot toward rates and away from the balance sheet. The balance sheet is still expanding right now.

Seasonality stacks on top of it. September rarely treats traders well. Midterm election years have been worse.

Here’s what Brandon broke down in tonight’s video:

SPY 765 is the put wall for the entire week. Open interest sits at 63,000 contracts. That negative gamma builds every session into Friday’s expiration.
Brandon maps a seven point range. Resistance sits at 772 with a stretch toward 778. Support sits at 765.
770 holds the wall of resistance on today’s expiration. The 765, 766, and 767 strikes each carry roughly 13,000 contracts.
A break of 765 opens 760 quickly. Very little call interest sits below to absorb the move.
Rate hike odds for the next meeting jumped to 65% from 41% a week ago. Friday’s early rally in Mag Seven names and bonds reversed hard into the close.

ISM manufacturing and Friday’s jobs report land this week. Brandon doesn’t expect the jobs number to move the tape unless it shocks.

The structure at 765 is the story. Watch that level and you’ll know exactly when this market gets interesting.