The 90-Second Read
cash above the flip
- Chips lead a second slide The S&P 500 closed at 7,765.36, 0.68% under Tuesday's record close, with the Nasdaq Composite the weak spot as semiconductors fell as much as 4% at the lows. The trigger was a published report that OpenAI's annualized revenue is about $20 billion lower than earlier signals, which landed on a group already carrying large financing commitments. The Dow, helped by energy and staples, finished higher.
- Oil gives some back WTI and Brent spiked on reports that the Pentagon had drafted strike options for Iran, then eased after President Trump said the U.S. will not attack Iran before the November 3 midterms; both are lower again this morning and gold is higher. Storm-related Gulf of Mexico output cuts and tanker attacks near Hormuz keep the supply side tight.
- Yields fell, the Fed debate did not Treasury yields fell across the curve Thursday after the highest readings since 2002 earlier in the week. Waller's line that hikes need not come at consecutive meetings keeps October open, yet Fortress's Elizabeth Burton puts October at a coin flip. The bond market is shut Monday, so Friday's close carries three days of Treasury risk.
- AI on credit, a telecom shock Broadcom is seeking more than $50 billion for OpenAI-related chip financing and has approached Apollo and Blackstone, Oracle is in talks with Apollo and Goldman Sachs, and SpaceX has discussed $40 billion. Verizon is indicated about 7% lower before the open on a report that SpaceX is acquiring spectrum to become a mobile carrier; the report is unconfirmed.
- Levels into the open ES sits 8 points under Cannon's first resistance and 29 points above the central pivot. The dealer put wall in ES terms and the second support level are within about 5 points of each other, which is the cleanest overlap on the board today.
The Scoreboard
| Instrument | Level | Change | Session |
|---|---|---|---|
| S&P 500Record close 7,818.93 on Tuesday; intraday high 7,844.52 | 7,765.36 | −0.47% | Thu close |
| Nasdaq Composite | 27,193.34 | −1.25% | Thu close |
| Dow Jones Industrials | 51,231.64 | +0.10% | Thu close |
| Russell 2000 | 2,794.13 | +0.03% | Thu close |
| ES Dec 26Cannon Edge settle 7,816.25 (−0.38%) | 7,850.25 | +0.43% | Live vs settle |
| NQ Dec 26Settle 30,969.50 (−1.31%) | 31,244 | +0.89% | Live vs settle |
| YM Dec 26 | 51,608 | +0.22% | Live vs settle |
| RTY Dec 26 | 2,824.5 | +0.53% | Live vs settle |
| WTI Nov 26Settle 91.49 (+2.27%) | 90.14 | −1.5% | Live vs settle |
| BrentThursday settle 104.28 | 102.61 | −1.6% | Live vs settle |
| Gold Dec 26Settle 4,157.00 (+0.50%) | 4,225.80 | +1.7% | Live vs settle |
| Silver Dec 26Settle 59.42 (−0.97%) | 60.82 | +2.4% | Live vs settle |
| Natural gas NovSettle 3.17 (−2.46%) | 3.13 | −1.3% | Live vs settle |
| US 10-yearTreasury daily curve; live level not confirmed | 5.22% | −6bp | Thu close |
| US 2-year | 4.75% | −2bp | Thu close |
| US 30-year | 5.60% | −7bp | Thu close |
| Dollar index (DXY) | 102.04 | −0.1% | Live |
| EUR/USD | 1.1232 | — | Live |
| USD/JPY | 158.32 | — | Live |
| BitcoinCannon Edge settle 81,950 (−1.93%) | 82,458 | +0.6% | Live vs settle |
| Nvidia (NVDA)Thursday −2.94% to 230.48 | 234.64 | +1.8% | Pre-mkt |
| Broadcom (AVGO)Thursday −4.35% to 360.14 | 367.61 | +2.1% | Pre-mkt |
| Advanced Micro Devices (AMD)Thursday −3.90% to 620.68 | 631.50 | +1.7% | Pre-mkt |
| SpaceX (SPCX)Thursday −4.19% to 160.57 | 166.69 | +3.8% | Pre-mkt |
| Verizon (VZ)Thursday +1.27% to 46.35 | 42.91 | −7.4% | Pre-mkt |
Live prices as of about 4:30 ET. Index rows are Thursday closes; futures change is against the Cannon Edge settle, the firm's own prior-session close. Single-name rows show Thursday's close with the premarket change against it. Yields are Thursday's cash-market closes; no live yield level was confirmed this morning.
Sentiment & Flow Gauges
| Gauge | Reading | Read |
|---|---|---|
| VIXThursday close · prior close 15.08 | 15.41 | CALM Barely higher on a tech-led down day, so the headline gauge shows little alarm |
| Fear & Greed indexLatest · prior day 44.7 | 37.9 | FEAR Slid about seven points in a session as the chip selloff hit |
| AAII sentimentSurvey week ending October 7 | 40.3 / 39.0 | SPLIT Bulls and bears are nearly level, which does not match the fear reading above |
| Dealer gamma regimeThursday cash vs. close-based flip | +43.84 | POSITIVE Fifth close above the flip, though the cushion is less than half of what it was a day ago |
| S&P 500 new highs / lows52-week · prior session | 5 / 2 | NARROW Highs edged back ahead of lows after a day when lows led, though both counts are small |
| S&P 500 above 200-day | 46.5% | THIN Up from 44.4% a day earlier, still under half |
| S&P 500 up / down volume | 65% up | BUYERS A rebound from 36% up a day earlier even as the index slipped |
| High-yield spreadICE BofA HY OAS · latest print, Oct 7 | 3.09% · −3bp w/w | STABLE Six basis points wider on the day, still well inside the early-October peak |
Flow Read
The index fell on a day when most of its stocks did not: up volume was a clear majority and the equal-weight fund beat the cap-weighted one, so the damage sat in semiconductors and the largest technology names, not in the average member. That is a more benign shape than the prior session's, but the fear gauge and the survey of individual investors disagree about how worried to be, and positive gamma is carrying less cushion than it did. Net liquidity moved from draining to adding with Thursday's balance-sheet release, a change of regime that tends to favor dip buyers.
Yesterday's Calls Graded
Calendar & Scenario Map
| Time ET | Event | Consensus | Prior |
|---|---|---|---|
| Before open | Delta Air Lines third-quarter results | — | — |
| 10:00 | University of Michigan consumer sentiment, preliminary October | 47.6 | 48.1 |
| 1:00 PM | Baker Hughes oil rig count | — | 456 |
| Later | Fed's Collins speaks (time not confirmed) | — | — |
| Mon Oct 12 | Columbus Day: bond market closed, stocks open · no major U.S. data | — | — |
| Tue Oct 13 | Large banks open third-quarter earnings · NFIB small-business index · existing home sales | — | 98.7 / 3.98M |
| Wed Oct 14 | September CPI, month over month: headline and core · Beige Book | 0.6% / 0.2% | 0.4% / 0.3% |
| Thu Oct 15 | September PPI, retail sales, jobless claims · Fed H.4.1 balance sheet 4:30 PM · tax date pulling cash into the Treasury's account · corporate buyback window begins to reopen · Taiwan Semiconductor reports | — | 0.4% / +1.2% |
| Oct 27–28 | FOMC; decision Wednesday at 2:00 PM | — | — |
Consensus is left blank where published forecasts differed or could not be confirmed. The Cleveland Fed's inflation nowcast for September CPI runs near 0.5% headline and 0.2% core, close to the forecast above.
Levels & Structure
Cannon Edge: ES settled 1.0% under its 52-week high with both trends Up, Nasdaq-100 futures show both trends Up, gold's short-term trend is Down, and the thirty-year bond future sits about 1.9% above its 52-week low with both trends Down.
| Gamma level | SPX | ES Dec · +50.89 | Role in today's tape |
|---|---|---|---|
| Call wall | 8,000.00 | 8,051 | About 235 points above Thursday's close and unchanged since last week. The October 16 SPX chain does not reach it: its window ends at 7,985, where interest has died out to a few hundred contracts, so 8,000 sits just beyond the edge and cannot be compared. Inside the window the heaviest call strike is 7,800 (about 27,200), with 7,900 (about 16,600), 7,850 (about 14,000) and 7,950 (about 13,600) behind it. Today's ES expiry book has scattered call interest, one large strike far out at 8,020 (about 10,700) and about 3,600 at 7,900, so no clean ceiling there. |
| Gamma flip | 7,721.53 | 7,772 | The regime boundary, 44 points under the close and 20 points higher than Wednesday's read of the same level, now 22 points above the put wall. The regime resets only on a cash close, not on an overnight print. |
| Put wall | 7,700.00 | 7,751 | Unchanged and 65 points under the close. The October SPX book agrees: 7,700 holds about 25,200 puts, the largest below the market, with a shelf beneath it at 7,600 (about 20,200) and 7,650 (about 16,000), and 7,550 still carrying about 7,300 at the lower edge, so the interest runs on below the window. Today's ES expiry book peaks at 7,750 (about 8,900 puts), within a point of the ES equivalent of the wall. Calls at 7,700 (about 19,800) and puts at 7,800 (about 15,600) are real in-the-money interest, not walls. |
Levels are SPX, close-based, from a public dealer-gamma (GEX) model. The ES column adds Thursday's basis: the Cannon Edge settle less the cash close. 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 (7,820.75) sits 29 points under live futures, so the day opens above its central line. Resistance starts at R1 (7,858.50), 8 points overhead, with R2 (7,896.00) and R3 (7,933.75) beyond it; R2 sits within two points of the month's high on the Cannon Edge board. Support starts at S1 (7,783.25), with S2 (7,745.50) and S3 (7,708.00) beneath it, and S2 lands within 6 points of the ES equivalent of the put wall, the same overlap the map shows.
Volatility structure
Protection demand rose into the close while the headline gauge barely moved. VVIX closed at 87.66, up from 83.18, and the SKEW index at 149.19, up from 141.84, a large jump in the price of downside puts relative to calls on a day the VIX added only a third of a point. The VIX futures curve could not be read this morning.
Concentration, not participation
The cap-weighted S&P fund trades at 3.653 times the equal-weight fund, down from 3.690 a day earlier, because the equal-weight fund rose about 0.6% while the cap-weighted fund fell about 0.4%. The Magnificent Seven fund closed at 73.03.
Institutional Positioning
Burton's favored asset is floating-rate private credit, which she puts at about 9% unlevered on the filings of business-development companies against 6% to 9% she expects from equities, and she says the equity risk premium is compressed and fair value for the ten-year is around 5% to 6%. She estimates roughly even odds that the Fed hikes in October.
She also argues that as much as a trillion dollars of AI financing may need private credit to get done, which is the other side of this week's financing headlines.
Newton wrote Thursday afternoon that early weakness looked bad but crude is starting to "wither" while rates pull back, that tech still looks quite good and that the indices held where they needed to. He added that the deterioration in the broader tape is worth monitoring.
Yardeni's Thursday note calls the outlook for public finances grim: governments are spending well beyond their means, global debt issuance is expected to run about 23% of world output this year, and higher interest rates and war-driven defense spending add to it. He also flags junk-bond financing of two data-center projects.
The strategist said the S&P 500 now has about 44% of its market value exposed to AI infrastructure, that the index trades near 19 times forward earnings against 23 a year ago, and that clients are leaning toward fixed income, with a recommendation of about a four-year duration.
Desk Shift Tracker
| Voice | Firm | Stance | What changed in this window |
|---|---|---|---|
| Elizabeth Burton | Fortress | CAUT | New: favors floating-rate private credit and sees even October hike odds. See card. |
| Mark Newton | Fundstrat | BULL | New: says crude is fading, rates are easing and tech still looks good. See card. |
| Ed Yardeni | Yardeni Research | CAUT 7,900 | Held the year-end target; new note calls the global debt outlook grim. See card. |
| Goldman Sachs strategist | Goldman Sachs | NEUT | New: AI infrastructure is about 44% of index value; leans to bonds. See card. |
| Shawn Tuteja | Goldman Sachs | CAUT | Held: says the asymmetry on AI upside has shifted; no new note. |
| Joachim Klement | Panmure Liberum | BEAR | Held: bearish 2027 target on an AI bust. |
| Dan Ives | Yorkville Ives | BULL | Held: technology at outperform; no new remarks. |
| Henry Allen | Deutsche Bank | CAUT | Held: bonds and stocks price different regimes. |
| Cameron Dawson | NewEdge Wealth | CAUT | Held: slower earnings growth next year leaves less buffer. |
| David Keller | Sierra Alpha Research | CAUT | Held: wants far better moving-average breadth before trusting upside. |
| Tom Lee | Fundstrat | BULL | Held: sees a coiled spring and a dip worth buying. |
| Jonathan Krinsky | BTIG | CAUT | Held: expects the S&P 500 to chop and slip from the record. |
| Rick Rieder | BlackRock | NEUT | Held: stocks are just okay, bonds a real alternative, December hike expected. |
| Tony Pasquariello | Goldman Sachs | BULL | Held: primary trend higher. |
| Ohsung Kwon | Wells Fargo | CAUT 7,700 | Held: year-end target of 7,700 set in September; the index is 0.8% above it. |
| Mike Wilson | Morgan Stanley | CAUT | Held: breadth hides weakness; an October pullback is a place to add risk. |
The caution camp (Burton, Yardeni, Tuteja, Klement, Allen, Dawson, Keller, Krinsky, Wilson) is questioning what the index is ignoring in debt, funding and breadth, while Newton, Ives, Pasquariello and Lee argue earnings, AI demand and falling oil carry it.
Macro Pressure Map
| Gauge | Reading | Read |
|---|---|---|
| Net liquidityFed balance sheet − TGA − RRP · Wednesday levels · updates Thu | $5.86T · ▲ $112B w/w | ADDING Switched from draining; the move came mostly from a drop of about $98 billion in the Treasury's cash account |
Rates: a relief day, with a holiday ahead
Yields fell from the top of the curve down on Thursday, with the long end leading, after touching the highest levels since 2002 during the week. The Fed minutes and Waller's remarks leave a further hike by year-end as the base case, and the weekly count of new jobless claims eased to 197,000 with continuing claims about 1.71 million, a labor market that is not weakening fast enough to change that. September CPI arrives Wednesday, the first inflation reading after the energy spike, and the bond market is closed Monday, so any shock over the weekend meets thin Treasury trading on Tuesday.
Oil and the Gulf
The sequence matters: crude jumped on a report that the Pentagon was asked for options to strike Iran before the midterms, which is a request for options, not a decision, then gave back some of the move after the President said the U.S. will not attack Iran before November 3. A later report said the military has drafted three-day strike options, and tankers continue to be attacked near Hormuz, so the pullback is a headline reaction, not a change in physical supply. Gulf of Mexico producers have also cut output because of a storm.
Portfolio Positioning
Chips sold off Thursday after a published report that OpenAI's annualized revenue is about $20 billion lower than earlier signals; semiconductor indexes fell as much as 4% at the lows, with Arm, Intel and Marvell down more than 6% and Micron more than 5% intraday. The names are indicated higher this morning, but the report matters because the financing talks below assume the revenue.
Broadcom is seeking more than $50 billion to finance OpenAI's custom chips and has approached Apollo and Blackstone, with the size and terms still early and subject to change. Oracle is in talks with Apollo and Goldman Sachs about a separate entity that would buy chips and lease them back, and SpaceX has discussed about $40 billion to buy Nvidia chips. The goal is to close the Broadcom and Oracle deals by year-end.
Verizon is indicated about 7% lower before the open after a report that SpaceX is acquiring a spectrum license to become a major U.S. mobile carrier. The report is unconfirmed, and Verizon previously denied an earlier sale story, so the premarket move is the market pricing a possible competitor before the facts are in. SpaceX shares are indicated higher.
Goldman Sachs raised Palantir to Buy from Neutral with a $230 twelve-month target, about 18% above the shares, which are below their record of $207.18 set in November 2025. The stock rose 2% to 3% Thursday on the upgrade.
Fed Watch
| Pricing | Hike odds | Read |
|---|---|---|
| October 28 meeting | ≈ 15–20% | Roughly four in five hold; the futures-based tracker could not be read directly, so this is two secondary reads |
| December meeting | ≈ 80–85% | A further hike by year-end remains the pricing base case, with a funds target of 3.75–4.00% after September |
Governor Waller said Thursday that more hikes are needed but that they "do not need to come at consecutive meetings," which keeps October open to a pause. St. Louis Fed President Musalem said inflation is high and the labor market strong, without giving October guidance, and Collins speaks later today. The Fed's quiet period begins October 17, which makes Wednesday's CPI the last major input before the October 27–28 meeting, and the gap between a strategist's coin flip and a market price near one in five is the thing to watch.
What the Consensus Is Missing
October may be decided by one print
The debate over whether the Fed hikes this month is framed as a question about policy, but the calendar makes it a question about a single release. Wednesday's CPI is the last major inflation reading before the quiet period starts and two weeks before the meeting, and the market's price and one strategist's estimate sit far apart. A surprise either way would have to be absorbed in a session ahead of a bond-market holiday, not a clean week.
The revenue side of the AI bill was tested before the debt side was priced
The financing talks reported this week assume a revenue ramp, and Thursday's report is the first public datapoint to push the other way. Equities answered by selling chips harder than the index, while the spread on high-yield bonds has not widened over the week, which means credit has not yet been asked the same question. If the answer comes from credit first, it will arrive as a financing delay, not a price chart.
A calm VIX and a rising tail premium describe different markets
With dealers long gamma, hedging flows damp day-to-day moves, which keeps the VIX, a measure of the middle of the distribution, quiet. The jump in the cost of downside puts relative to calls says buyers are paying for protection against the tail instead, in the direction the equal-weight fund's outperformance says is not yet happening. The two readings agree only as long as cash stays above the flip, which is the one level that takes a fall of about 0.6% to test.
The Close
Thursday's slide was narrow in its causes and wide in its headlines, and the gamma map still points to a dampened open. What the tape cannot yet answer is whether a three-day weekend for bonds, an inflation print on Wednesday and a revenue question over AI leave that cushion standing; the first test is the 10:00 reading this morning.
eli@cannontrading.com · cannontrading.com
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