Market Commentary for Thursday, September 2, 2025, by Peter Cook

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We are gapping up into the Call Wall on SPY at 670.  Typically, that results in market makers coming out to slam this down.  The 30-Minute charts are roasted and toasted, so we might need to rest here.

We are still working through a crash setup, but we saw yesterday the market tipped its hand.  I said I wanted to see if shorts got squeezed because they had really loaded the boat up with puts and we got the squeeze yesterday.  You could tell because we went parabolic into the 2:30 PM EST margin call timeslot and after that it kind of stopped going up.  Don't get complacent because the same thing happened on 7/31/24 and the next week it still crashed.

Korea again was up 2%, dragging gold and bitcoin with it.  Some of the chip stocks that have been resting for weeks like #AMD are revving back up this morning and trying to run again.  

The Challenger Jobs Cuts report showed layoff intentions kind of moderating.  That's good to see.  I still expect the DOGE stuff to kind of peak into the Fall (especially if the elections turn out poorly for Rs).  Fed cutting into improving jobs market should create large inflation.

Still ALOT of hedging going on, betting on the market to go down, whatever you want to call it right now. 

I got some comments on the Bank puts yesterday so I figured I would share the chart, so you can see what I see.  I did screw up one thing, instead of 34,000 puts, it was "only" 11,000 on the volume (I looked at the wrong axis on the graph, mea culpa).  It is still ALOT of puts compared to normal.  Red bars/yellow bars = Put Volume, Open Interest and the Green Bars = Calls Volume, Open Interest and the bottom oscillator just measures when there is imbalance in the flow.  

It looks like those 11,000 puts never made it into the OI (so they were probably a 1-day hedge, but I think they were LEAPS way out into 2026 and 2027 if I recall).  None the less, if you look at individual names (MS or JPM) and even the KRE (Regional Bank ETF) there is still heavy put buying going on (and it is making its way into the OI).  So, the broader theme is still a lot of hedging going on.  

And if the timing is off just a little bit - those folks will have to cover their shorts, close their puts with a loss, etc. This is what we have going on right now.  

My number 1 rule for shorting is that I don't do it until the indexes fall under the 200 Day Moving Average.  I find it just doesn't work nearly as well as when we are in a Primary Uptrend. 

The gamma ratios are setting up bearish here after yesterday's bender.  Typically, it takes a day or two to roll over, but I'm expecting weakness sometime in the next week. 

Levels:

All the best;

   

Peter Cook

#NQ_F Chatroom Chief Moderator

Hamzei Analytics, LLC

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