The Pause Is Over
After the Memorial Day weekend, US markets reopen with appetite. S&P 500 futures trade at 7,536 points — up 45 points or +0.6% from Friday's close of 7,491. This is the largest overnight gap since May 5, when Nvidia reported earnings.
The Nikkei 225 closed today at 64,927 points, down 0.34%. No panic, no euphoria — Japan is consolidating after last week's rally to a new all-time high of 65,317.
DAX futures show +0.4% pre-market. Europe waits for the US session.
What Decides This Week
Thursday, 8:30 AM ET: PCE inflation data for April. This is the metric the Fed watches most closely. Consensus expects 2.3% annual growth (core PCE). If the number comes in higher, odds of a June rate hike jump from 12% to over 25%. If it comes in lower, the rally continues.
Options traders have already priced this in: Implied volatility on SPY options expiring May 30 sits at 14.2% — 2.8 percentage points above the 10-day average. Someone is buying protection.
The Options Side
On Friday, the last trading day before the break, $4.2 billion in QQQ calls with strike 490 and June 6 expiry changed hands. That's the highest single-strike volume since May 12 (Nvidia earnings). Call/put ratio on QQQ: 5.8:1.
Translation: The big players are betting on tech continuation, but they're hedging downside risk via SPY puts with strike 730 (currently 2.4% out-of-the-money).
Market maker gamma exposure is negative — meaning: every move gets amplified. If the S&P rises, they must buy shares. If it falls, they must sell. Explosive week ahead.
What Traders Are Watching Now
- 7,550 on the S&P 500: The new all-time high. Close above it and the path to 7,600 opens.
- 7,450 support: Break this level and it's back to 7,380 (50-day moving average).
- PCE Thursday 8:30 AM: Comes in >2.5%, calls crash. Comes in <2.2%, calls explode.
The pause is over. Now we trade.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.