The 90-Second Read
cash below the flip
- Monday broke the cushionYesterday's letter had the market 23 points above its gamma flip; the S&P 500 fell 0.77% and closed just under it. The index now sits 1.7% below its August 13 record of 7,816.70, with the Dow, Nasdaq and Russell 2000 off between 0.67% and 0.92%, and the VIX up 8%.
- Yields made another 2007 highThe 10-year closed at 5.242%, up from 5.18% Friday. Ed Yardeni told CNBC that higher-for-longer oil feeds stickier inflation and a tightening cycle, and Solus's Dan Greenhaus said the equal-weight S&P peaked when the 10-year began rising with oil. The Fed hiked to 3.75–4.00% on September 16; Australia's central bank raised again overnight.
- Iran said no, oil shruggedTrump rejected Iran's offer to reopen the Strait of Hormuz within a week, though Reuters reports he expects talks to resume this week. WTI spiked to about $96.50 intraday but settled only 0.57% higher at $92.60. Brent is easy to misread: the expiring November contract settled at $105.28, while the December contract, the benchmark from Thursday, trades near $97.
- The quarter ends WednesdayGoldman's desk estimates pension rebalancing could sell about $33 billion of U.S. equities into quarter-end, with roughly 87% of S&P 500 members in buyback blackout, and models trend followers as buyers if the tape holds flat, with a short-term trigger near 7,665.
- What's in front of usJOLTS and Conference Board confidence at 10:00, four Fed speakers, then PCE and Micron Wednesday, ISM Thursday and September jobs Friday. Nvidia's $150 billion buyback expansion, MongoDB's CEO exit and Boeing's MAX 10 delay set the single-name tone.
The Scoreboard
| Instrument | Level | Change | Session |
|---|---|---|---|
| S&P 500 | 7,683.69 | −0.77% | Mon close |
| Nasdaq Composite | 26,820.38 | −0.92% | Mon close |
| Dow Jones Industrials | 51,481.51 | −0.67% | Mon close |
| Russell 2000 | 2,817.91 | −0.69% | Mon close |
| ES Dec 26Cannon Edge settle 7,746.75 (−0.76%) | 7,742.75 | −0.05% | Live vs settle |
| NQ Dec 26Settle 30,566.25 (−1.15%) | 30,581.75 | +0.05% | Live vs settle |
| YM Dec 26Settle 51,837 | 51,786 | −0.10% | Live vs settle |
| RTY Dec 26Settle 2,840.1 | 2,836.6 | −0.12% | Live vs settle |
| WTI Nov 26Mon settle 92.60, +0.57% | 92.19 | −0.44% | Live |
| Brent Dec 26Mon Dec settle about 97.83 | 97.32 | −0.52% | Live |
| Gold Dec 26Mon settle 4,168.40, −3.85% | 4,178.00 | +0.23% | Live vs settle |
| Silver Dec 26Mon settle 61.72, −5.45% | 61.09 | −1.03% | Live vs settle |
| US 2-yearMon close 4.924% | 4.941% | +1.7bp | Live |
| US 10-yearMon close 5.242%, highest since July 2007 | 5.245% | +0.3bp | Live |
| US 30-yearMon close 5.562% | 5.558% | −0.4bp | Live |
| DXYMon close 101.20 | 101.45 | +0.25% | Live |
| EUR/USD | 1.1339 | −0.27% | Live |
| USD/JPY | 157.50 | +0.10% | Live |
| BitcoinCannon Edge settle 83,790, −0.78% | 84,231 | +0.53% | Live vs settle |
| MongoDB (MDB) | ≈ −20% | Mon | Mon close |
| Boeing (BA) | ≈ −6% | Mon | Mon close |
| Summit Therapeutics (SMMT) | ≈ +21% | Pre-mkt | Live |
| Navitas (NVTS) | ≈ +12% | Pre-mkt | Live |
Live prices as of about 5:45–6:00 ET. Index rows are Monday closes; futures change is against the Monday CQG settle.
Sentiment & Flow Gauges
| Gauge | Reading | Read |
|---|---|---|
| VIXMon close · Fri 14.87 | 16.07 | RISING Up 8% on the day, still modest against what rates are doing |
| VVIX · SKEWMon close · Fri 87.84 · 144.91 | 91.02 · 146.25 | BID Both crept up: demand for volatility protection and for out-of-the-money puts firmed a little |
| CNN Fear & GreedLive reading · one week ago 35.0 | 33.8 | FEAR Unchanged from the prior close despite Monday's drop |
| AAII sentimentWeek ending Sep 23 · latest posted | 32.7 / 48.1 | BEARS LEAD Bullish share against bearish share; neutral 19.2% |
| Dealer gamma regimeMon cash vs. close-based flip | −19.33 | NEGATIVE Cash closed below the flip |
| S&P 500 new highs / lows52-week · prior session | 8 / 35 | NARROW Lows outnumber highs more than four to one |
| S&P 500 above 200-day | 43.6% | THIN Under half the index in a long-term uptrend |
| S&P 500 up / down volume | 30% up | SELLERS Sellers dominated the tape without reaching a 90% washout |
| High-yield spreadICE BofA HY OAS · latest print, Sep 25 | 2.93% · +25bp w/w | WIDENING Credit spreads have widened at each of the last four prints, while equities were still near their record |
Flow Read
Fear and Greed held at 33.8 through Monday's slide and nearly half of individual investors are bearish, so positioning is defensive rather than crowded. The mechanical flows lean the other way: Goldman's desk models systematic strategies as net buyers of roughly $11.5 billion if prices hold flat, offset by the quarter-end pension rebalance and a corporate bid closed by blackout windows. BofA's Michael Hartnett kept his Bull & Bear sell signal active at 9.3 in his September 25 Flow Show, as investors sent $10.2 billion out of equities and $17.3 billion into bonds. With cash below the flip, hedging flows are more likely to reinforce a move than fade it, which is why the 7,700–7,703 band matters more than any single data point today.
Yesterday's Calls Graded
Calendar & Scenario Map
| Time ET | Event | Consensus | Prior |
|---|---|---|---|
| Pre-mkt | Carnival (CCL): EPS estimate $1.42, revenue $8.54B · CarMax (KMX): EPS estimate $0.71, revenue $6.94B | — | — |
| 10:00 | JOLTS job openings (Aug) | — | — |
| 10:00 | Conference Board consumer confidence (Sep) | — | — |
| 12:40 | Fed's Barr speaks · Goolsbee 1:00 · Williams 2:00 · Waller 3:00 (payments) | — | — |
| Wed | 8:15 ADP · 8:30 PCE price index (Aug) and Q2 GDP third estimate · 3:25 Fed's Cook · Micron after the close (call 4:30) · quarter- and fiscal-year end | — | — |
| Thu | 8:30 jobless claims · 10:00 ISM manufacturing (Sep) · 10:00 Fed's Jefferson · 4:30 pm Fed H.4.1 balance sheet (net-liquidity refresh) · Accenture, Nike | 54.9 | — |
| Fri | 8:30 September employment report; unemployment forecast 4.1–4.2% | +84K | +162K |
Barr and Waller speak on housing and payments; Goolsbee and Williams have the most room to touch rates. ISM consensus is a single published estimate; payroll forecasts range from +50K to +100K, so the consensus column carries the Reuters figure.
Levels & Structure
Cannon Edge (CQG) ES settle: 7,746.75, −0.76%; 30-day range 7,575–7,889.75; long-term trend Up.
| Gamma level | SPX | ES Dec · +63.06 | Role in today's tape |
|---|---|---|---|
| Call wall | 7,700.00 | 7,763.06 | About 16 points above Monday's close and three under the flip, so wall and regime boundary form one band to reclaim together. The October SPX chain puts its biggest call interest at 7,800 with heavy interest still on the board at the 7,900 edge of its range, so read the overhead as a shelf, not a peak. The near-dated E-mini book peaks at ES 7,830. |
| Gamma flip | 7,703.02 | 7,766.08 | The regime boundary. Live ES sits about 23 points under its ES-equivalent this morning. |
| Put wall | 7,600.00 | 7,663.06 | About 84 points under the close. The October SPX chain shows a floor near 7,600 but its largest put interest lower at 7,500, so support is a staircase. Today's near-dated E-mini book is much closer, peaking at ES 7,730, about SPX 7,667. |
Levels are SPX, close-based, from a public dealer-gamma (GEX) model. The ES column adds Monday's basis, the Cannon Edge Dec settle minus the verified SPX cash close, a spread of 63.06 points. Open-interest peaks are a near-dated proxy, not substitutes for the model's levels.
Where Cannon's own board agrees
Cannon's pivot in ES (7,758.67) sits within a few points of the ES-equivalents of the call wall and the flip, so the day's pivot and the regime boundary are effectively one zone, with ES beneath it on the amplified side. Live ES is 16 points under it, S1 (7,714.33) 28 under, and R1 (7,791.33) sits above the flip.
What the option books say this morning
Read the disagreement between books as information. Today's Tuesday-weekly E-mini book points to a tight corridor: put interest peaks at ES 7,730 (roughly 3,900 contracts) and call interest at ES 7,830 (roughly 5,400). The October SPX book is heavier: 7,700 carries notable interest on both sides (roughly 19,000 calls and 22,800 puts), with the larger put staircase running down to 7,500. Where the near-dated wall is closer than the model's, expect price to meet it first.
Concentration, not participation
Monday's slide was led from the top. The Magnificent Seven fund lost 1.54%, roughly twice the cap-weighted S&P 500 fund's 0.74% and well ahead of the equal-weight fund's 0.65%, and the cap-weight-to-equal-weight ratio slipped to 3.650 from 3.654. That is a dent in concentration, not a broadening: small caps fell 0.69%, and Wilson and Greenhaus both argue the leadership problem is a rates problem (see Institutional Positioning).
Institutional Positioning
Wilson turned near-term cautious in Morgan Stanley's Thoughts on the Market podcast, published late Monday: "If bond volatility does not settle down soon," he said, it could spill into equity volatility and take the S&P 500 down about 5% to 10%, a pullback he said he would welcome. The rally, he argues, has been carried by a shrinking group of stocks: more than half of the Russell 3000 sits at least 20% below its June highs and the S&P's forward multiple is down to 19 times, near a new low for the year.
It is a shakeout call, not a bear call. Wilson still overweights large-cap quality, favoring asset-light, services-oriented, fee-based businesses, and would use October weakness to add riskier stocks. He said the two-year yield already sits above what the Fed's projections imply and called the new chairman more of a monetarist than his predecessors. His 8,000 year-end target was not restated.
JPMorgan's trading desk, led by Andrew Tyler, flipped to tactically bullish from neutral on Monday, Bloomberg reported, the same day the 10-year made a new high. Its argument: yields are finding a level, oil is likely to drift lower in choppy fashion, and activity, spending and earnings remain resilient. It favors technology and semiconductors, the Mag 7 and, if the curve steepens, banks.
The move reverses the desk's August 31 caution after Fed Chair Warsh's Jackson Hole speech and puts JPMorgan's flow view at odds with Morgan Stanley's on the same morning: the same bond backdrop is read as a ceiling by one desk and a floor by another.
On CNBC's Closing Bell, Greenhaus said there is "a lot under the headline" that is directly related to rates. The equal-weight S&P 500, he pointed out, peaked when the 10-year began rising in response to oil's move from roughly $80 to $100, not the traditional cap-weighted index, which has been cushioned by the work AI is doing. If rates and oil keep rising, he told the audience, he is not sure investors can be convinced that now is the moment to rotate, though he contrasted that with a long-horizon investor for whom any selloff is to be bought.
On the same Closing Bell panel, Yoder defended the mega-cap trade on earnings. It began a few months ago, she said, when companies delivered strong earnings and the return on AI spending investors wanted to see; capital has since rotated out of cyclical parts of the market, small caps in particular, toward companies that have demonstrated they are earning money. That growth is expected to slow, she acknowledged, but those companies have kept beating the lowered expectations.
Sonders argued that equity investors should lean into quality: positive forward earnings growth, stable margins without exorbitant valuations, and balance-sheet strength, especially high interest coverage now that yields are higher. The cap-weighted index may not show the damage, she said, but it is visible in interest-sensitive utilities, REITs and financials, and likely to persist.
She prefers screens to single stocks: companies using AI to cut costs or raise margins, and what managements say on third-quarter calls about cost of capital against return on capital. Many growth and value indexes, she cautioned, simply label expensive stocks as growth; she prefers growth characteristics at a reasonable valuation.
Desk Shift Tracker
| Voice | Firm | Stance | What changed in this window |
|---|---|---|---|
| Mike Wilson | Morgan Stanley | BULL→CAUT | Near-term pullback risk if bond volatility spills over. See card. |
| Andrew Tyler's desk | JPMorgan | NEUT→BULL | Tactical flip to bullish, reversing the August 31 caution. See card. |
| Ed Yardeni | Yardeni Research | CAUT 7,900 | Target restated on CNBC; wary on yields. See Macro Pressure Map. |
| Ben Snider | Goldman Sachs | BULL 8,700 | Says valuation compression is a rates story; target unchanged. |
| Michael Hartnett | Bank of America | SELL SIGNAL | Bull & Bear at 9.3 (from 9.5); sell signal intact. |
| Meghan Swiber | Bank of America | SHORT DURATION | Sees higher rates ahead. See Macro Pressure Map. |
| Dan Greenhaus | Solus | NEW · CAUT | Rotation not credible while rates and oil rise. See card. |
| Abby Yoder | J.P. Morgan Private Bank | NEW · BULL | Mega-cap trade has legs on earnings. See card. |
| Liz Ann Sonders | Charles Schwab | NEW · QUALITY | Lean into quality and interest coverage. See card. |
| Dan Ives | Yorkville Ives & Co. | BULL | Nvidia buyback bull. See Portfolio Positioning. |
| David Keller | Sierra Alpha Research | CAUT | Asked on X whether a flat index over two months masks a stealth bear market. |
| Mohamed El-Erian | Independent | CAUT | Flags France, Japan and the UK as fragile G7 links. See What the Consensus Is Missing. |
The clearest live split is between two desks reading the same yield backdrop: JPMorgan's trading desk now sees yields finding a level, while Morgan Stanley's Wilson says bond volatility has not settled.
Macro Pressure Map
| Gauge | Reading | Read |
|---|---|---|
| Net liquidityFed balance sheet − TGA − RRP · Wednesday levels · updates Thu | $5.80T · ▲ $50B w/w | ADDING Unchanged since last Thursday's release; the next refresh follows Thursday's H.4.1 |
What rates would have to do to hurt stocks
BofA's rates strategist Meghan Swiber told CNBC on Monday that, in the firm's data, the 10-year has to approach 7% before valuations are meaningfully damaged: forward multiples hold near 16 times across yields from zero to 7% and fall to a median of 12.1 times above that. The firm remains short two-year rates and sees higher rates ahead. That is a case that equities can absorb today's yields, and it sits awkwardly beside Wilson's view that the two-year is already pricing more than the Fed projects.
Ed Yardeni's version, on Squawk Box: the escalation in the Middle East and the rebound in oil feed a stickier inflation and therefore a tightening cycle, while the bond market also discounts an economy he calls booming. He called a 10-year at 5.25% "a pretty attractive rate" the economy can handle, since yields would have to exceed nominal GDP growth, which he put at 6.6% in the second quarter, to truly bite, but said he cannot guarantee it will not reach 5.5% and perhaps higher.
Inflation into Wednesday's PCE
The Cleveland Fed's nowcast, as reported by Kiplinger, has August PCE inflation at 3.78% year over year and core at 3.40%, the numbers the October hike debate leans on. Goldman's Ben Snider says the decline in the S&P's forward multiple is a rates effect, with the equity risk premium near 3% for two years.
Oil: an offer rejected, a contract expiring
Iran's foreign minister, Abbas Araghchi, offered through Qatar to reopen the Strait of Hormuz within a week if Washington lifts its blockade and waives oil sanctions; Trump rejected the terms Saturday, though Reuters reports he expects talks to resume this week. The distortion to watch is in Brent: the expiring November contract settled Monday at $105.28, while the December contract that becomes the benchmark Thursday trades about $8 lower, so a headline "drop" in Brent this morning can be a roll effect rather than a market move.
Portfolio Positioning
Nvidia announced Monday morning an additional $150 billion share-repurchase authorization, the largest increase in its history, leaving $235 billion in total to be executed through fiscal 2028, according to the company and Reuters. The shares rose roughly 1% to 2% in Monday's pre-market, so the reaction is already in the price. Yorkville's Dan Ives called it "a genius move" on Closing Bell, citing a demand-to-supply ratio he put at 13 to 1 from Asia checks.
AMD agreed to buy Fei-Fei Li's World Labs for $8.2 billion in stock, per AMD's release, and RTX rose overnight on a $20.7 billion missile contract.
MongoDB fell roughly 20% after CEO CJ Desai left after 11 months to become Meta's chief enterprise platform officer; Dev Ittycheria returns as interim CEO, guidance was reaffirmed, and William Blair, Evercore ISI and BofA reiterated bullish ratings. Boeing dropped about 6%, its worst day in roughly a year and a half, after the FAA delayed 737 MAX 10 certification over a software issue, per CNBC. Paramount Skydance rose 3.8% while lining up about $44.4 billion of additional secured debt for its Warner Bros. Discovery deal, including a $7.5 billion leveraged loan Bloomberg says has enough demand at yields up to 9%.
Before the open, Summit Therapeutics and Navitas are up sharply on a AstraZeneca collaboration and a government contract respectively; Carnival and CarMax report, and Micron on Wednesday is the read on the AI memory cycle.
Fed Watch
| Meeting · October 28 | 25bp hike | Read |
|---|---|---|
| CME FedWatch | 70.3% | Up from 64.2% a day earlier |
| Kalshi / Polymarket | ~69% | About 30% for a hold; a December hike priced near 76% |
The two readings from Monday's letter, roughly 51% and 66%, have converged upward. The September 16 hike lifted the target range to 3.75–4.00%, the first increase since 2023. Governor Lisa Cook said in remarks reported overnight that she expects continued inflation pressure from AI-driven demand and oil, but stopped short of saying more hikes are needed. Four more Fed voices speak today (Barr, Goolsbee, Williams and Waller), Cook returns Wednesday at 3:25 and Jefferson speaks Thursday morning; the calendar is the story, with PCE on Wednesday and payrolls on Friday the two prints that can move these odds.
What the Consensus Is Missing
The hedges sold off with the stocks, and that is the tell
Monday's cross-asset tape was not a normal risk-off day. Gold dropped 3.85% on the CQG settle and silver 5.45%, with copper and natural gas down 2.5% and 3.4%, while the dollar firmed and stocks fell. Assets held as protection against debasement traded as long-duration instruments, marked down by the same rising yields hitting equities. BofA's Hartnett titled his September 25 Flow Show "Debasement & Duration"; Monday showed how that pairing behaves when rates rise fastest. If yields stabilize, the metals are where a relief bid would be expected to show first; if not, the market is selling what it can rather than what it wants to.
The sharpest AI skeptic has stopped shorting and started buying puts
Michael Burry's newsletter on Monday said he is moving from short positions to put options on key AI stocks, "moving timelines up," because puts are relatively cheap with volatility exceptionally tight. That is a statement about structure rather than direction: the bet against the AI leaders is being expressed with defined risk instead of open-ended short exposure. It matters for how a drop would unfold, since dealers who sell those puts hedge by selling into weakness, and Monday's dealer-gamma regime is already the amplifying one.
This is a global bond story with a Sydney and Tokyo leg, not a Washington feud
The domestic narrative has been the Fed against the Treasury, but the pressure is coming from several sides. Australia's central bank raised again overnight, while Mohamed El-Erian pointed on X to Japan's 10-year yield near 3.10%, its highest in three decades, and named France, Japan and the UK as the fragile links in the G7. Ed Yardeni's newsletter blames the global bond rout more on the unwinding of the yen carry trade as the Bank of Japan tightens than on inflation, calling it the "Revenge of the Bond Vigilantes." If that is right, a soft American print will not stop yields rising, because the marginal seller is not in Washington.
The Close
Monday showed what happens when yields rise faster than earnings can compensate: the index slipped below its regime line and the metals sold with the equities, while strategists split between those who welcome a shakeout and those who see yields finding a level. This morning's futures are flat because nothing has resolved. The next three sessions, ending with Friday's jobs report, will show whether 7,700 was a pause or a lid.
eli@cannontrading.com · cannontrading.com
LEGAL DISCLOSURE & RISK WARNING — Cannon Trading Company
This publication is provided by Cannon Trading Company for informational and educational purposes only. Content may include market commentary, technical observations, analyst opinions, and aggregated material derived from publicly available sources. While such information is believed to be reliable, Cannon Trading Company does not author, independently verify, endorse, or guarantee the accuracy, completeness, or timeliness of any third-party information referenced or summarized herein.
The information, opinions, market data, and commentary contained in this publication are subject to change at any time without notice and do not constitute investment advice, a solicitation, or a recommendation to buy or sell any security, futures contract, option on futures, foreign currency transaction, or any other financial instrument.
Past performance is not indicative of future results.
Trading Futures, Options on Futures, retail off-exchange foreign currency transactions, and other derivatives involves substantial risk of loss and is not suitable for all investors. You may lose all or more than your initial investment. Carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances.
Cannon Trading Company does not guarantee any profits and makes no representation that the strategies, ideas, analyses, or information presented will result in profitable trades or avoid losses. Any market views, analyst calls, forecasts, or third-party commentary referenced reflect the opinions of their respective authors and may or may not align with the views of Cannon Trading Company.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NO INVOLVE FINACIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETLEY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
Cannon Trading Company is registered solely as a commodities broker. Nothing contained herein constitutes the provision of investment advisory services.
© 2026 Cannon Trading Company, Inc. All rights reserved. cannontrading.com • 1-800-454-9572 • (310) 859-9572