The 90-Second Read
cash above the flip
- Records and a bond problemThe S&P 500 rose 0.66% to 7,773.95, 0.33% below its August 13 record close, while the Nasdaq Composite closed at a record 27,477.31 on gains in Nvidia, Microsoft and Broadcom. The ten-year yield rose above 5.34% during the session, a level last seen in 2002, and is easing slightly this morning.
- Hot prices, weak jobsSeptember ISM services came in on forecast, but its prices-paid gauge reached its highest reading since July 2022, three days after payrolls rose only 29,000. The mix is what Wall Street's strategists are arguing over: soft growth, firm inflation, and a Fed that raised rates in September and has a December hike priced as the likelier path.
- Two views of the same tapeGoldman's Tony Pasquariello says the primary trend is still higher and expects the S&P 500 to finish the year higher, while BlackRock's Rick Rieder called stocks "just OK" with bonds now a real alternative. Goldman's Robert Quinn adds that real-money accounts have been selling index futures into the rally.
- Deals and an electionBrazilian assets surged after a first-round election result favoring Flavio Bolsonaro, PTC jumped on a takeover agreement, and Lennar and C.H. Robinson fell. SpaceX extended its run on a Morgan Stanley Buy rating. The full moves are in the Scoreboard and Portfolio Positioning.
- Three tests, then the minutesNew York Fed President Williams speaks at 9:05, the Treasury auctions $58 billion of three-year notes at 1:00, and tomorrow's minutes of the September meeting, at which the Fed raised rates, arrive at 2:00 PM. The index sits near the top of its range going into all three.
The Scoreboard
| Instrument | Level | Change | Session |
|---|---|---|---|
| S&P 500 | 7,773.95 | +0.66% | Mon close |
| Nasdaq CompositeRecord close | 27,477.31 | +1.05% | Mon close |
| Dow Jones Industrials | 51,267.90 | +0.18% | Mon close |
| Russell 2000 | 2,847.14 | +0.50% | Mon close |
| ES Dec 26Cannon Edge settle 7,826.25 (+0.68%) | 7,842.00 | +0.20% | Live vs settle |
| NQ Dec 26Settle 31,317.75 (+0.89%) | 31,385 | +0.21% | Live vs settle |
| YM Dec 26 | 51,806 | +0.48% | Live |
| RTY Dec 26 | 2,874.0 | +0.22% | Live |
| WTI Nov 26Monday settle 89.43, −2.20% | 88.41 | −1.14% | Live vs settle |
| Brent Dec 26Monday settle 100.32 | 99.81 | −0.51% | Live vs settle |
| Gold Dec 26Settle 4,156.80, −0.12% | 4,167.90 | +0.27% | Live vs settle |
| Silver Dec 26Settle 61.30, +1.14% | 61.19 | −0.18% | Live vs settle |
| US 2-yearMonday close about 4.82% | 4.82% | −1bp | Live |
| US 10-yearMonday close about 5.31% | 5.29% | −3bp | Live |
| US 30-yearMonday close about 5.66% | 5.64% | −3bp | Live |
| Dollar index (DXY) | 102.04 | −0.13% | Live |
| EUR/USD | 1.1233 | +0.10% | Live |
| USD/JPY | 158.18 | +0.17% | Live |
| BitcoinCannon Edge settle 86,005, +1.39% | 85,899 | −0.12% | Live vs settle |
| Nvidia (NVDA)Monday close 238.90, +2.12% | 240.89 | +0.83% | Pre-mkt |
| SpaceX (SPCX)Monday close 171.09, +7.63% | 172.47 | +0.81% | Pre-mkt |
| PTCMonday close 192.26, +33.49% | 191.77 | −0.25% | Pre-mkt |
| C.H. Robinson (CHRW)Monday close 140.61, −10.85% | 141.23 | +0.44% | Pre-mkt |
| Lennar (LEN)Monday close 74.44, −6.73% | 75.24 | +1.07% | Pre-mkt |
Live prices as of about 4:10 ET. Index rows are Monday closes; futures change is against the Monday CQG settle where Cannon Edge carries it, otherwise the quoted change. Yields are live reads beside Monday's closes. Bitcoin's 24-hour change differs by data feed, so it is shown against the CME settle.
Sentiment & Flow Gauges
| Gauge | Reading | Read |
|---|---|---|
| VIXMonday official close · prior close 15.31 | 15.52 | CALM Barely changed on a record Nasdaq day, with the 9-day index well below spot |
| CNN Fear & GreedLatest · one week ago 29 · one month ago 45 | 43 | FEAR Up sharply from last Friday's low-30s, still short of neutral |
| AAII sentimentWeek ending Sep 30 · next survey Thursday | 34.6 / 46.5 | BEARS LEAD Bears outnumber bulls by nearly 12 points |
| Cboe equity put/callMonday | 0.59 | CALL-LEANING Slightly higher than Friday's 0.58, not a change in tone |
| Dealer gamma regimeMonday cash vs. close-based flip | +103.41 | POSITIVE Second close above the flip, so dealer hedging dampens moves |
| S&P 500 new highs / lows52-week · prior session | 16 / 12 | NARROW Both counts are low, with highs ahead by a small margin on a record-Nasdaq day |
| S&P 500 above 200-day | 42.8% | THIN Up from 42.0% on Friday |
| S&P 500 up / down volume | 70% up | BUYERS Up from 59% on Friday and clear of the 60% line |
| High-yield spreadICE BofA HY OAS · latest print, Oct 2 | 3.10% · +17bp w/w | WIDENING Eased 14bp from Thursday's 3.24%, the first daily narrowing in nine prints; Monday's print posts later today |
Flow Read
The tape had volume behind it this time, but the support underneath it is mixed: the S&P 500 is up 1.3% over four weeks while net liquidity fell $45 billion over the same span, and the sentiment gauges still describe a market that does not believe the move. With ES a little above its settle and positive gamma intact, the open is a question of whether the dampened regime holds through Williams, the three-year auction and the minutes.
Yesterday's Calls Graded
Calendar & Scenario Map
| Time ET | Event | Consensus | Prior |
|---|---|---|---|
| 8:30 | Trade balance (August) | −$99.0B | −$88.6B |
| 9:05 | New York Fed President Williams speaks | — | — |
| 10:45 | Vice Chair Bowman speaks | — | — |
| 1:00 PM | Three-year note auction, $58 billion | — | — |
| After close | Constellation Brands reports | — | — |
| Wed Oct 7 | EIA crude inventories 10:30 · FOMC minutes of the September 15–16 meeting 2:00 PM · ten-year reopening, $39 billion | — | — |
| Thu Oct 8 | Initial jobless claims 8:30 · 30-year reopening, $22 billion · PepsiCo before the open · Fed H.4.1 balance sheet, 4:30 PM (net-liquidity refresh) | — | — |
| Fri Oct 9 | University of Michigan sentiment, preliminary October, 10:00 · Delta Air Lines before the open | 48.1 | 47.6 |
| Oct 12–16 | Columbus Day Monday: bond market closed, stocks open · large banks open third-quarter earnings Tuesday | — | — |
| Oct 14 | September CPI | — | — |
| Oct 15 | Corporate buyback window begins to reopen, per Citadel Securities · tax date pulling cash into the Treasury's account | — | — |
| Oct 27–28 | FOMC; decision Wednesday at 2:00 PM | — | — |
The minutes cover the meeting at which the committee raised rates, so they predate last Friday's jobs data and Monday's services survey. Consensus figures for claims are left blank because published forecasts differed.
Levels & Structure
Cannon Edge (CQG): ES settled with a short-term trend Down and a long-term trend Up; Nasdaq-100 futures show both trends Up, and the 30-year bond future sits near its 52-week low with both trends Down.
| Gamma level | SPX | ES Dec · +52.30 | Role in today's tape |
|---|---|---|---|
| Call wall | 8,000.00 | 8,052 | About 226 points above Monday's close and 200 higher than last week's 7,800. The October 16 SPX chain shows its own largest call interest above the market at 7,800 (about 28,300 contracts), then 7,900 (about 17,700), 7,850 (about 14,200) and 7,950 (about 14,100); that window ends at 7,990, so the 8,000 strike sits just outside it and cannot be read there. |
| Gamma flip | 7,670.54 | 7,723 | The regime boundary, 103 points under the close and almost unchanged since Friday's read. Above it, dealer hedging works against moves; below it, with them. Live ES is about 119 points over the ES equivalent, but the regime resets only on a cash close. |
| Put wall | 7,700.00 | 7,752 | Unchanged and now 74 points under the close. The October SPX book agrees: 7,700 holds about 25,300 puts, with 7,600 (about 16,200) and 7,650 (about 15,500) as steps beneath, and interest fades to about 600 at the 7,555 bottom of the window. The 7,700 strike also carries about 20,100 calls, and 7,750 about 16,600, real in-the-money interest from heavy trading rather than walls. |
Levels are SPX, close-based, from a public dealer-gamma (GEX) model. The ES column adds Monday's basis. Open-interest peaks are a near-dated proxy and do not replace the model's levels; where the two differ, the difference is information.
Where Cannon's own board agrees
Cannon's ES pivot (7,812.42) sits about 30 points under live futures, so the day opens above its central line. Resistance starts at R1 (7,864.58), roughly 23 points up, with R2 (7,899.67) and R3 (7,951.83) beyond it. Support starts at S1 (7,777.33), about 25 points above the ES equivalent of the put wall, and S2 (7,725.17) lands within about 2 points of the ES equivalent of the flip, which makes that area the cleanest overlap between the dealer map and the firm's own levels.
Volatility structure
The VIX curve is in full contango. The 9-day index sits at 12.85, so the very front is calm, while the 3-month reads 18.00. The October future settled at 17.46, about 12% over spot, with November at 18.14 and December at 18.55; VVIX closed at 85.46, and the SKEW index at 143.
Concentration, not participation
Monday's rally was again led from the top. The cap-weighted S&P fund still trades at 3.670 times the equal-weight fund, unchanged from the prior reading, a level that says cap-weight has held its ground rather than extended it, while the Nasdaq's record came with Nvidia, Microsoft and Broadcom each up between 1.5% and 2.1%.
Institutional Positioning
BlackRock's chief investment officer of global fixed income says the market can live with higher rates "as long as it moves there slowly," but that this was "a pretty big move" and that "there is a big alternative now": his funds are producing a yield above 7% with about three years of duration in A-minus paper, which lets pensions and endowments reach a 7% return target without private assets. He rates stocks as "just OK," sees earnings growth of 10% to 15% and expects it to "come down a bit," and has trimmed equity exposure while still buying upside cheaply.
He expects the Fed to raise rates in December while saying he would not do it himself, keeps duration short, has cut European credit after the French and Italian bond moves, and prefers Japan and Brazil. On the Treasury Secretary's weekend remarks he said Bessent was showing the Treasury has tools, but that the Fed is the more effective instrument for the back end. Of equities, he said "I've got to get 25 stocks right," because concentration "is going to exist forever."
Goldman's head of hedge fund coverage said "the basic framework is still intact": the economy is performing very well, earnings are strong, money flow is supportive, and "the primary trend is higher." He expects choppy trading until year-end because of the bond market's pressure on equities, and "my guess is S&P finishes higher." The forward multiple has fallen to 19 times from 23 times a year ago, offset by mega-cap tech and energy earnings, and a portfolio split between those two sectors "hasn't had a down year since 2018."
The caution is in positioning: he rates hedge-fund appetite for equity risk at +2 on his scale, down from +6 two months ago, and says animal spirits are lower than in the second quarter, with financials wearing the strain of a flatter yield curve and edgier global bonds.
Quinn's Monday note says asset managers sold about $64 billion of S&P futures in five of the last six weeks, including $10.5 billion in the latest, in a pattern he describes as unmoved by the soft-data rally: "Non-dealer futures flows are not" bouncing. His view is that what stops the selling is yields reversing, not a single day's reaction to a soft jobs or inflation print. The positioning data run through September 29, so they predate Monday's rally.
Desk Shift Tracker
| Voice | Firm | Stance | What changed in this window |
|---|---|---|---|
| Rick Rieder | BlackRock | NEUT | Stocks "just OK"; bonds a real alternative; December hike expected. See card. |
| Tony Pasquariello | Goldman Sachs | BULL | Primary trend higher, S&P finishes the year higher; hedge-fund risk appetite low. See card. |
| Robert Quinn | Goldman Sachs | CAUT | New: asset managers selling index futures into the rally. See card. |
| Goldman derivatives desk | Goldman Sachs | CAUT | Held Garrett's view that the S&P no longer behaves like the clearing price for risk; partner Bobby Molavi says the market feels "healthy and unhealthy at the same time." |
| Michael Hartnett | Bank of America | CAUT | Held: add bonds, with the risk-off tripwires from Sunday's Flow Show; no new note. |
| Mike Wilson | Morgan Stanley | CAUT | Held: breadth resolves through bond volatility; no new note. |
| Ed Yardeni | Yardeni Research | BULL 7,900 | Held the year-end target; says corporate profits just reached a record $3.9 trillion while employee pay fell to its lowest share of national income on record. |
| Tom Lee | Fundstrat | BULL | Calls the market a "coiled spring" under "excessive pessimism," says small caps are one too, and reads Nasdaq and crypto strength as pointing to easier financial conditions. |
| Mark Newton | Fundstrat | NEUT | Sees improvement in broker-dealers; says a ten-year-to-two-year spread above 55 basis points would start to help banks; index near short-term resistance. |
| David Keller | Sierra Alpha Research | BULL | Says the S&P 500 finally got follow-through and a bull-flag breakout, with leadership broadening, though breadth "still needs work." |
| Sonali Basak | iCapital | CAUT | First report: the ten-year is "not at the height" yet; expects a K-shaped economy and market. |
| Dan Ives | Yorkville Ives | BULL | Nvidia estimates too low. See Portfolio Positioning. |
The bond-and-flow camp (Rieder, Quinn, Goldman's derivatives desk, Hartnett, Wilson) is asking what the index is ignoring, while Pasquariello, Lee, Keller and Yardeni argue earnings and pessimism carry it.
Macro Pressure Map
| Gauge | Reading | Read |
|---|---|---|
| Net liquidityFed balance sheet − TGA − RRP · Wednesday levels · updates Thu | $5.75T · ▼ $52B w/w | DRAINING The same September 30 reading as Monday's letter; the next balance-sheet release is Thursday |
Services: the inflation side of the ledger
September's ISM services survey, released Monday, held its headline at about the forecast, but under it, the prices-paid gauge was the highest since July 2022, and input-cost pressures ran at their fastest in more than four years. Employment improved to 50.1 from 47.8, new orders eased to 59.8, business activity fell to 56.5 from 61.7, and backlogs rose to their highest since July 2022, while export orders slipped below 50 for the first time in eight months. Together with Friday's payrolls it is the stagflation-tinged reading strategists keep returning to.
Rates: supply, term premium and Washington
Yields are higher across the curve over the past month, the ten-year up roughly half a point and the thirty-year near its highest since 2002, and the longer end has led the two-year, so the curve has steepened. Treasury Secretary Bessent said in a weekend interview that rising yields are a global trend, that he is not seeing investors sell Treasuries to buy German or Japanese bonds, and that he cannot control the bond market. The week's supply runs from today's three-year notes through Wednesday's ten-year and Thursday's thirty-year reopenings, and the bond market is closed next Monday for Columbus Day.
Oil and gold
The G7's 100-million-barrel reserve release and a rebound in Middle East crude shipments, which JPMorgan estimates at 98% of pre-war levels, are weighing on crude even as Brent holds near $100, and gold sits near a two-month low after falling about 6% over the past month as higher yields and a firmer dollar outweighed the soft jobs data. EIA inventories arrive Wednesday.
Portfolio Positioning
Flavio Bolsonaro took more than 47% of Sunday's first round and finished nearly two points ahead of President Lula, who was expected to lead, and the two face a runoff in just under three weeks. Prediction markets moved his odds of winning above 80%. The Brazil ETF (EWZ) rose 12.5% on Monday and the Bovespa rose 7.7%, with Itaú Unibanco, Bradesco and Nubank up 13% to 19% in the US. The ETF is flat before the open. Rieder, who prefers Brazil, was asked about it on air.
PTC rose 33.5% on Monday on reports that Schneider Electric agreed to buy it in an all-cash deal valued at about $22.6 billion, and Autodesk and Bentley Systems moved in sympathy. C.H. Robinson fell 10.9%, the S&P 500's worst performer, after agreeing to buy RXO for about $5.8 billion, a deal on which S&P Global Ratings moved its outlook to negative. Lennar fell 6.7%, its worst day since 2024, on the same day Berkshire Hathaway disclosed buying another $190 million of its shares; none of the three is moving much premarket.
SpaceX gained 7.6% Monday and closed at its highest since mid-June, after Morgan Stanley's Adam Jonas initiated at Buy with a $300 target, arguing the shares trade at roughly 0.3 times forward EV/EBIT/growth, about 40% under the mega-cap median, with upside from AI products, Starship tests and neocloud contracts. The stock is ahead another 0.8% premarket.
Dan Ives, a partner and senior managing director at Yorkville Ives, says that Nvidia's earnings estimates are "probably underestimated by 25, 30%" over the next year, that chip demand-to-supply is widening toward 13-to-1 or 14-to-1, and that Microsoft's Azure growth could add an unpriced 10% to 15% to revenue. Nvidia closed Monday near its record high and is up another 0.8% premarket.
Fed Watch
| Pricing | Hike odds | Read |
|---|---|---|
| October 28 meeting | ≈ 22% | About four in five hold, near last week's pricing |
| December meeting | ≈ 69% | Monday's read: a hike by year-end is still favored, with a funds target of 3.75–4.00% after September |
The September projections showed 16 of 18 officials expecting at least one more quarter-point increase this year and four expecting two. Williams said on September 30 that one more increase this year may be appropriate, a statement desks read as less aggressive than feared, and he speaks again at 9:05 this morning with Vice Chair Bowman at 10:45. The minutes arrive Wednesday at 2:00 PM. Rieder and Matus both expect a December hike. The quiet period begins October 17.
What the Consensus Is Missing
Prices, not payrolls, are driving the Fed
The market spent last week treating a 29,000 payroll print as a reason for the Fed to wait, but the survey that landed on Monday says the larger part of the economy is paying more for inputs than at any time since mid-2022, with backlogs rising. A committee that raised rates in September on prices will read services inflation as the heavier signal, which is why the minutes and Williams matter more to the front end than the next jobs report.
The steepening is a term-premium story
Since the end of September the ten-year has risen about 3 basis points while the two-year has fallen about 7, leaving the gap near 47 basis points from about 36, so the curve is moving the way a supply-and-term-premium selloff moves, not the way a bet on faster Fed hikes would. Newton's 55-basis-point marker for helping banks is the first level at which that same steepening turns from a headwind for stocks into a tailwind for one sector.
Someone is buying what asset managers are selling
Goldman's Quinn counts $64 billion of index-futures selling by asset managers in five of six weeks while the index sits 0.3% from a record and Fear & Greed has climbed from the low 30s to 43. Whoever is absorbing that, whether corporate buyback desks ahead of the October 15 window, vol sellers or trend followers re-entering, is a different buyer from the long-only demand that usually carries a record, and Lee's view that pessimism is excessive depends on which of those it is.
The Close
Monday gave the market a record Nasdaq and the highest services prices in four years in the same session, and the gamma map is tilted toward calm. What it cannot say is whether a bond market near 2002 highs will allow it: Williams, a three-year auction and tomorrow's minutes will start to answer that.
eli@cannontrading.com · cannontrading.com
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