The S&P 500 jumped 1.66% today. It pushed right back near its highs. Brandon Chapman sees a trap forming.
We have stood at this exact level before. It produced a 5% correction just last month.
Brandon watched one number all day. The market needed to clear 760 on the SPY.
Price stalled below it. A magnet at 755 dragged the S&P right back to it.
The close printed 754.66.
The order flow gave it away. Puts and calls traded almost dead even.
Bulls needed a wave of call buying. It never arrived.
Here is the part that should concern you. The volatility structure now matches the warning Brandon flagged on May 14th.
He lays out the full case in tonight’s video:
The three-month VIX ran more than 20% above the 30-day VIX for most of the session. That contango reading lines up with a 5% to 10% decline over the next 30 days.
SKEW closed Friday at 142. Brandon hunts for bigger corrections once SKEW pushes north of 130. Rising SKEW means institutions are buying puts and selling calls.
The S&P only climbed because the dollar fell. Gold gained 2.5% and silver gained 3.5%, both beating the index. Brandon says that leadership is a warning, not a green light.
Heavy put buying today raised the negative gamma line to 752. Lose 750, then 745, and volatility expands fast.
The May 14th echo is the piece that matters most. That trigger sparked a rally, then a 5% slide from the high.
Nvidia (NVDA) took the worst of it. It dropped 16% from peak to trough in that move.
Seasonality backs him up. The Nasdaq tends to fade in June before a July bounce.
Brandon also shared the exact trade he took today. The stall at 755 cost him a clean winner, and he explains why.
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