The 90-Second Read
35 points above the flip
- Meta beats, and the market still sells Meta reported third-quarter revenue about $1.2 billion above expectations, guided the fourth quarter above the Street and narrowed its capital-spending range, and its shares are higher after hours. Tesla beat on revenue and earnings and is lower, IBM beat and is lower, and Lam Research gave a guide barely above consensus and is down about 7%. A New Mexico judge also ordered Meta to pay $25 billion; the company will appeal. The details are in Section 9.
- A tech-led rally on Wednesday The S&P 500 rose 0.58% to 7,757.17, the Nasdaq Composite 1.05% and the Dow 0.69%, while the Russell 2000 added 0.27%. Technology led and communication services lagged, the reverse of Tuesday's broad rally.
- The Gulf is back in the driver's seat Brent is above $111 and WTI near $99, each up about 2%, after the United States ordered non-emergency staff out of Saudi Arabia amid escalating Houthi attacks and a report that U.S. and Israeli planners have drawn up a short renewed strike on Iran for after the November 3 midterms. Gold fell about 1%, silver about 2.4%, and the yen firmed; the oil detail is in Section 8.
- Asia and the euro area sold off Japan, Hong Kong, South Korea and China all fell sharply overnight, and French and British ten-year yields are above 5%, a stress the U.S. Treasury market has so far absorbed with little change.
- A light calendar under a silent Fed Jobless claims, the leading index, natural gas storage and the Kansas City Fed survey are the data; a 5-year inflation-protected auction at 1:00 PM and the Fed balance sheet at 4:30 PM are the other prints. Procter & Gamble, Union Pacific, Honeywell and Lockheed Martin report before the open. Futures pricing puts a hike on October 28 at about 15% and one by December at about 87%.
- Levels into the open Futures sit about 52 points under Cannon's ES pivot of 7,788.00 and under first support at 7,763.75, which is within a point of the ES equivalent of the gamma flip. Second support is 7,726.75 and third 7,702.50; first resistance is 7,825.00. The model's put wall is 7,700 in SPX terms, about 7,743 in ES.
The Scoreboard
| Instrument | Level | Change | Session |
|---|---|---|---|
| S&P 500Record close 7,818.93 on Oct 6 · now 0.79% below it | 7,757.17 | +0.58% | Wed close |
| Nasdaq Composite | 26,702.86 | +1.05% | Wed close |
| Dow Jones Industrials | 52,856.09 | +0.69% | Wed close |
| Russell 2000 | 2,781.02 | +0.27% | Wed close |
| ES Dec 26Wednesday settle 7,800.25 · 52-week high 7,897.5 | 7,735.50 | −0.83% | Live vs settle |
| NQ Dec 26Wednesday settle 30,007 | 29,531 | −1.59% | Live vs settle |
| YM Dec 26 | 52,851 | −0.39% | Live vs settle |
| RTY Dec 26 | 2,774.3 | −0.71% | Live vs settle |
| WTI Dec 26Wednesday settle 97.15 | 99.20 | +2.11% | Live vs settle |
| Brent | 111.39 | +2.36% | Live |
| Gold Dec 26Wednesday settle 4,150.00 | 4,105 | −1.08% | Live vs settle |
| Silver Dec 26Wednesday settle 57.71 | 56.33 | −2.39% | Live vs settle |
| US 10-yearTreasury yield · Tuesday close 5.12% · 2-year 4.81% · 5-year 4.95% · 30-year 5.42% | 5.13% | +1bp | Wed close |
| Dollar index (DXY) | 101.53 | −0.2% | Overnight |
| EUR/USD · USD/JPY | 1.1249 · 157.40 | Overnight | |
| Bitcoin | 82,746 | −1.6% | 24 hours |
| Nikkei · Hang Seng · Kospi · Shanghai | −2.6% · −3.2% · −4.2% · −1.4% | Asia overnight | |
| Meta · Tesla · IBM · Lam Research · Texas InstrumentsAfter the close, after their reports | +2.2% · −3.3% · −4.6% · −7.4% · +1.3% | After hours | |
| SpaceX · Netflix · Super Micro | +7.8% · −5.3% · +9.6% | Wed close | |
| Nvidia · Apple · Microsoft · Amazon · AlphabetWednesday close | +2.5% · +1.3% · +0.2% · −0.1% · −1.6% | Wed close |
Futures, commodity, currency, bitcoin and Asian rows are reads from about 2:00 AM ET, with futures changes against Wednesday's settles; index rows and yields are Wednesday's closes, and after-hours moves are the last prints of Wednesday's extended session, not a premarket read.
Sentiment & Flow Gauges
| Gauge | Reading | Read |
|---|---|---|
| VIXWednesday close · prior close 17.31 | 16.68 | EASING Down 3.6% on a day stocks rose, with the skew index also falling 10 points to 150.4 |
| Dealer gamma regimeWednesday cash vs. close-based flip | +35.20 | POSITIVE First close above the flip after five below, though futures imply an open under it |
| Fear & Greed indexWednesday close · 30.3 a week ago | 31.3 | FEAR Price strength, breadth, put/call and safe-haven demand sit at extreme fear; momentum, volatility and junk-bond demand are neutral |
| Retail investor surveyWeek ended Oct 21 · bulls / bears | 36.9% / 45.8% | BEARS AHEAD Bears widened from 41.6% a week earlier while the index sat under 1% from its record close |
| S&P 500 new highs / lows52-week · prior session | 25 / 3 | BROAD New highs clearly outnumbered new lows for a second session |
| S&P 500 above 200-day | 54.5% | THIN A little over half the index's members sit above their long-term average |
| S&P 500 up / down volume | 54% up | MIXED Buyers held only a slim volume edge, well short of Tuesday's |
| High-yield spreadICE BofA HY OAS · latest print, Oct 20 | 3.33% · +17bp w/w | WIDENING Wider over the week as stocks held near their highs; Wednesday's print is not yet posted |
Flow Read
Wednesday's rally rested on a narrower base than Tuesday's: technology led while communication services, staples, real estate and health care fell, so the largest stocks beat the average stock, and buyers' volume edge shrank to a slim one. New highs still crowded out new lows, but with only about half the index above its 200-day average the market is repairing damage more than extending a trend. Sentiment is gloomier than prices, with the fear gauge near 31 and retail bears about nine points ahead of bulls while the index sits under 1% from its record close, and the credit gauge has not joined the rally. The dealer regime is positive, but the cushion is thin.
Yesterday's Calls Graded
Calendar & Scenario Map
| Time ET | Event | Consensus | Prior |
|---|---|---|---|
| Thu Oct 22 | 8:30 weekly jobless claims · 10:00 leading index · 10:30 natural gas storage · 11:00 Kansas City Fed manufacturing survey · 11:30 4-week and 8-week bill auctions · 1:00 PM 5-year inflation-protected note auction · 4:30 PM Fed balance sheet, the first reading to carry the October 15 tax receipts into the Treasury's account | Claims 200K Gas storage +80 Bcf | 199K +67 Bcf KC Fed 20 5Y TIPS 1.955% |
| Thu · open | Before the open: Procter & Gamble, Union Pacific, Honeywell, Lockheed Martin, Comcast, Blackstone, Valero, Spotify, Norfolk Southern, American Airlines | P&G $1.89 · UNP $3.47 Honeywell $2.17 Lockheed $7.49 Comcast $0.98 Blackstone $1.26 Valero $21.28 Spotify $3.10 AAL −$0.28 | — |
| Thu · close | After the close: Western Digital, Newmont, Verisign, Bloom Energy | WDC $3.99 Newmont $1.94 Verisign $2.42 Bloom $0.56 | — |
| Fri Oct 23 | 9:45 flash purchasing managers' indexes for manufacturing and services · 10:00 final consumer sentiment · American Express and SLB before the open · European, British and German flash PMIs and British retail sales earlier in the morning | Sentiment 46.3 | 48.1 |
| Oct 26–27 | Mon 1:00 PM 2-year note auction · Tue 8:30 durable goods, 10:00 consumer confidence, 1:00 PM 5-year note auction | Confidence 80 | 81.9 |
| Oct 28–30 | Wed: FOMC decision 2:00 PM and press conference 2:30 PM, with the Bank of Canada at 9:45 AM. Thu: European Central Bank 9:15 AM, third-quarter GDP and claims 8:30, 7-year note auction 1:00 PM. Fri: Bank of Japan decision, announced overnight Asia time | — | — |
Earnings estimates are per-share consensus on a basis that differs by provider. Consensus for the leading index and the flash PMIs is left out because published forecasts disagree.
Levels & Structure
Cannon's own pivots put the ES Dec daily pivot at 7,788.00, with resistance at 7,825.00, 7,849.25 and 7,886.25 and support at 7,763.75, 7,726.75 and 7,702.50; the contract's 52-week high of 7,897.50 sits just above third resistance and its 30-day low of 7,575 well under third support. The firm's trend signals read down on the short horizon and up on the long horizon for both ES and NQ.
| Gamma level | SPX | ES Dec · +43.08 | Role in today's tape |
|---|---|---|---|
| Call wall | 8,000.00 | 8,043 | Up 200 points from Tuesday's read of 7,800 and 243 points above the close, far outside the day's likely range. In the November SPX chain the largest call strike inside the readable window is 7,900 (about 21,000), ahead of 7,800 (about 12,400) and 7,850 (about 11,800); the window ends at 7,975, where interest is still about 3,000, so 8,000 sits just past its edge and 7,900 is a shelf and not a proven peak. In today's expiring ES options the largest call strikes are 7,900 (about 3,300) and 7,850 (about 3,250). |
| Gamma flip | 7,721.97 | 7,765 | The regime boundary, now below the close and down about 29 points from Tuesday's read of 7,751.22. The regime resets only on a cash close, not on an overnight print, and the flip now sits only 22 points above the put wall. |
| Put wall | 7,700.00 | 7,743 | Unchanged for a second day and 57 points under the close. The November chain agrees: the largest put strike below the market is 7,700 (about 23,300), with 7,600 (about 20,400) and 7,750 (about 10,300) next. A very large strike at 7,500 sat just below the window's quiet lower edge in the prior read, so 7,600 to 7,700 is a shelf. Today's expiring ES options put their largest put interest at 7,640 (about 3,100), 7,725 (about 2,900) and 7,600 (about 2,850). |
Levels are SPX, close-based, from a public dealer-gamma (GEX) model. The ES column adds Wednesday's basis: the futures settle less the cash close. Open-interest peaks are a near-dated proxy and do not replace the model's levels; the November chain is the monthly expiry of November 20.
Volatility structure
The October VIX contract settled Wednesday morning at 16.82, and the December contract sits near 18.55 with the curve rising to about 21.0 by June 2027. SPX options imply annualized volatility near 13.1% against realized near 9.9%,.
Concentration, not participation
The cap-weighted S&P fund closed Wednesday near 773.1 and about 3.568 times the equal-weight fund, up from 3.563 a day earlier, because the cap-weight fund gained 0.53% against 0.36% for the equal-weight fund. The Magnificent Seven fund rose about 1.0% to near 72.9, the small-cap fund gained 0.25%, and within the index the technology sector fund rose 1.67% while communication services fell 1.11%.
Institutional Positioning
Hartnett's latest weekly note says his bull-and-bear indicator fell to 7.4 from 8.1, which ends the sell signal triggered in May, though he is explicit that it is not a buy signal. He still wants two things before adding risk, a Fed hike on October 28 and easier financing for AI, and neither is in place. He expects a return to technology in mid-November if chip prices keep rising and meanwhile favors small caps, real estate and consumer discretionary. His call for an October hike runs against futures pricing.
Rubner's client feedback, read out on air Wednesday, is that investors treat the midterm elections as a clearing event for risk, that the period after is when AI can outperform, and that they are "happy to buy higher, but not buy now." It is a relayed client quote, not a new published note. The firm's October update favors selective single-stock exposure over adding index beta.
Yardeni asks in his latest note whether analysts' earnings expectations are irrationally exuberant, pointing out that the S&P 500 is up 13.3% this year despite a 13.5% contraction in its forward price-to-earnings ratio, with forward earnings up 31%. He adds that semiconductor earnings are up 176% from a year ago while the industry's multiple has fallen to 14.2. His year-end S&P 500 target is 7,900, cut from 8,400 in September, with 8,400 now a mid-2027 goal.
Mahaney, new to the roster, said before the results that Meta has proven demand for a consumer AI agent, expected guidance above the Street with the stock roughly flat and a floor near 20 times earnings, and named Amazon his top pick. Ives said Meta's spending is at last producing results, raised his odds of a SpaceX–Tesla merger to 90% from 80%, and after the quarter called the Meta and SpaceX numbers a one-two punch. Kevin Gordon of Schwab said the negative correlation between oil and stocks is near its worst in three decades, that small caps fell into correction while the S&P 500's drawdown stayed small, and that the ten-year yield has room to hold or rise. Newton said the rally looks stronger under the surface and the index is less than 100 points from its record, but expects a choppy path until the midterms and wants yields and crude to peak. Gerstner argued that demand for AI compute is unconstrained.
Desk Shift Tracker
| Voice | Firm | Stance | What changed in this window |
|---|---|---|---|
| Michael Hartnett | BofA | CAUT | Moved: sell signal ended but no buy signal; wants an October hike and easier AI financing. Full note in Section 6. |
| Mike Wilson | Morgan Stanley | NEUT | Held: correction near its end but no bottom call; quality favored; no new note. |
| Scott Rubner | Citadel Securities | NEUT | New: clients will buy higher but not before the midterms. |
| Ben Snider | Goldman Sachs | NEUT | Held: defensive tilt after cyclicals trailed defensives by 6% in two weeks. |
| Goldman Sachs economics team | Goldman Sachs | CAUT | Held: next hike in December, moved from October on September 30. |
| Ed Yardeni | Yardeni Research | NEUT | New: earnings expectations versus a shrinking multiple; year-end target 7,900. |
| Mark Newton | Fundstrat | BULL | Held: rally stronger under the surface; choppy until the midterms. |
| Mark Mahaney | Evercore ISI | BULL | New: Amazon the top pick; Meta flat on guidance above the Street. |
| Dan Ives | Yorkville Ives | BULL | New: Meta and SpaceX results a one-two punch for AI demand; 90% odds of a merger. |
| Brad Gerstner | Altimeter | BULL | New: AI compute demand unconstrained. |
| Kevin Gordon | Charles Schwab | CAUT | New: oil in the driver's seat; correlation with stocks near a three-decade extreme. |
| Mislav Matejka | JPMorgan | BULL | Held: yield surge nearing exhaustion, with France the main risk; no new note. |
| Andrew Tyler's desk | JPMorgan | BULL | Held: tactically bullish since September 28. |
| Ohsung Kwon | Wells Fargo | CAUT 7,700 | Held: the year-end target is set at that level; the index is now 0.7% above it. |
| Jonathan Krinsky | BTIG | BEAR | Held: chips in a longer decline; a counter-trend rally is a chance to cut exposure. |
| David Keller | Sierra Alpha Research | BULL | Moved: technology back on top; 7,600 the line in the sand for the index. |
| Mohamed El-Erian | Allianz | CAUT | New: France's yield surge the largest since the Iran attacks began. |
| Jeremy Siegel | WisdomTree | NEUT | New: no October hike, a December hike very likely. |
| Elizabeth Burton | Fortress | CAUT | Held: even October hike odds against much lower market pricing. |
| Anastasia Amoroso | Partners Group | BULL | Held: feels better about the market. |
Most large desks published nothing verifiable inside the window, so their entries carry forward unchanged; several new voices are headline-level or panel appearances only.
Macro Pressure Map
| Gauge | Reading | Read |
|---|---|---|
| Net liquidityFed balance sheet − TGA − RRP · Wednesday levels · updates Thu | $5.87T · ▲ $10B w/w | FLAT Little changed since last Thursday's release, with the reverse-repo facility essentially empty |
Rates: a quiet U.S. market inside a stressed world
Wednesday's 20-year auction cleared at 5.469%, about 5 basis points above the previous one, and Treasury yields finished little changed, with the ten-year trading near 5.09% overnight. Abroad the pressure is greater: France's ten-year yield touched 5.00%, its first time there in 24 years, the British ten-year sits near 5.37%, Japan's near 2.89% and Germany's near 3.42%. British September inflation ran 3.5% against 3.4% expected, and the Bank of England's governor speaks at 6:50 AM.
Oil and the Gulf
December WTI is near $99 and Brent near $111, each up about 2% from Wednesday's settle. The driver is the widening Saudi front: the State Department ordered non-emergency staff and families out of Saudi Arabia, and a strike hit the airport at Dammam. A report citing U.S. officials says American and Israeli planners have drawn up a short, intensive strike on Iran's energy, nuclear and missile sites for after the midterms, which Washington says it will not carry out before them. Shipping data show flows through the Strait of Hormuz back near pre-war levels. U.S. crude inventories fell 3.06 million barrels against an expected draw of 0.8 million. Gold fell about 1% to within a few dollars of its 30-day low of 4,091, and China's stock market is in a bear market, down 20% from its June peak.
Inflation and the Fed
A statistical nowcast puts October consumer prices up about 0.25% on the month and 3.75% on the year. With no Fed speakers until the decision, the next inflation evidence is Friday's flash purchasing managers' indexes.
Portfolio Positioning
Meta reported third-quarter revenue of $64.60 billion, up 26%, against about $63.37 billion expected, and guided the fourth quarter to $73 billion to $76 billion, a midpoint above the Street. Full-year capital spending is now $135 billion to $145 billion, narrowed from $130 billion to $145 billion, and there was no 2027 guide. GAAP earnings were $3.83 a share after a $9.89 billion legal charge tied to its settlement with state attorneys general. Separately, a New Mexico judge ordered Meta to pay $25 billion over the Cambridge Analytica case; Meta will appeal, and the amount is not in the quarter's results. The stock closed at $697.52 and is up about 2% after hours.
Tesla earned $0.48 a share adjusted ($0.22 GAAP) on $28.05 billion of revenue, against about $0.43 and $27.88 billion expected, with automotive revenue down 3%. Active subscriptions to its driving software reached 1.74 million, Optimus production has begun, and there was no capital-spending guide. The shares closed up 3.4% at $386.47 and are down about 3% after hours. On SpaceX's call Musk said independent directors at both companies have formed special committees to discuss a merger, that he is recused, and that Tesla's side would need a majority of all outstanding shares. SpaceX closed up 7.8% at $159.31 and is down about 1.6% after hours.
IBM earned $2.95 adjusted against $2.86 expected and is down after rising at first. Lam Research guided the December quarter to $8.60 billion and $2.33 a share against about $8.53 billion and $2.31 expected, and the stock is down sharply, a high bar after a run. Texas Instruments reported revenue of $6.06 billion and GAAP earnings of $2.62 and guided the fourth quarter to $5.80 billion to $6.30 billion; consensus was not available to compare against, and the shares are higher. Southwest cut its 2026 profit guide to $2.60 to $2.85 a share on fuel costs, the third airline to do so after Delta and United.
Netflix fell 5.3% the day after its guidance trim, while Super Micro rose 9.6% after its preannouncement. Among Tuesday's morning reporters, 3M rose 2.0%, Northrop Grumman 1.0% and General Motors fell 1.3%.
Fed Watch
| Pricing | Hike odds | Read |
|---|---|---|
| October 28 meeting | ≈ 15% | Down from about 28% a week ago, as of about 2 AM today; the market sees a hold |
| December meeting | ≈ 87% | Cumulative odds of at least one hike by the December 9 decision, with a single 25-basis-point hike the largest share at about 74% |
The funds target is 3.75% to 4.00% after September's hike, the first in three years under Chair Warsh. The committee is in its quiet period with no scheduled speakers, and this afternoon's balance-sheet release is the only scheduled Fed print before the October 28 decision at 2:00 PM. Opinions split on October: BofA's Hartnett wants a hike, while WisdomTree's Siegel does not expect one and calls a December hike very likely, as do Goldman Sachs' economists.
What the Consensus Is Missing
The 7,700 strike is a crowded two-way level, not a clean floor
The put wall is also where the November chain holds its largest put interest below the market, about 23,300 contracts, and about 19,900 November calls sit at the same strike, in-the-money interest that is heavily traded. A level with that much on both sides is where hedgers rebalance in both directions, so a decisive break would not simply hand the market to the downside; it would also unwind those call positions. With futures implying an open within eight points of it, the strike matters before the flip does.
AI financing is breaking down at the edge while the index sits near its record
The group of AI-cloud names has fallen roughly 28% to 35% in October, one sector IPO has been withdrawn, and CoreWeave slipped again after hours. The index has not noticed, because the largest AI beneficiaries are still being rewarded for results. Credit is where the two views meet, so the direction of high-yield spreads matters more this week than the earnings beats.
Meta's legal bill is now a line item next to its capital spending
The market rewarded Meta for revenue and guidance while a $9.89 billion charge cut reported earnings and a separate $25 billion penalty, which the company will appeal, sits outside the quarter entirely. Together they equal roughly a quarter of this year's capital-spending guide. The shares are rising anyway, so investors are treating legal costs as one-time and capex as the test; the next trials the finance chief flagged would test that belief.
The Close
The market opens with futures down about 0.8%, Nasdaq contracts weaker, oil bid intact, and a dealer flip that the index finally closed above but that a lower open could put back in play. The tests are whether futures can recover Cannon's first support and the ES equivalent of the flip, whether the selling in chip equipment stays contained, and whether the Gulf headlines hold the oil bid ahead of the October 28 Fed decision.
eli@cannontrading.com · cannontrading.com
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