S&P 500 Daily Trade Plan: CPI Negative Gamma & The 7420 Momentum Pivot
A detailed ES & VIX plan for May 12th, breaking down the 7420.00 gamma flip, the 7399.25 Daily support, and the 18.29 VIX midpoint pivot.
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Morning everyone. Today is Tuesday, May 12th, and we come off another rocking day in the trade plans. We sniped the 7399.25 Daily long on the weekend review on Sunday and gave the indication at that time that if this level held, we could potentially make all-time highs in price discovery mode once again. That is exactly what happened.
The Sunday gap down held 7399.25, then retested our significant 7402.00 4-Hour, propelling us to new heights throughout Monday morning. After the launch, we got a nice little pullback into the 7420.50 4-Hour, which launched us another 26 points after the market opened. That was a fantastic catch for subscribers. Congratulations to everyone who took advantage of the plan yesterday. It paid serious dividends as we continue to traverse all-time highs in price discovery mode.
As we come into the morning, we have a very important shift in market structure. The gamma flip has moved above us, putting us back in Negative Gamma territory. That means dealers are hedging short and can potentially bring downside movement and volatility into the session. The interesting part is that the gamma flip is sitting directly at our significant momentum shift pivot around 7420.00, the same area we played for the long yesterday. Below 7420.00, dealers are hedging short. Above 7420.00 - 7420.50, they have to flip positioning, which can create a substantial upside pop.
A Note on Today’s Market:
News: We have major Red Tag news at 8:30 AM Eastern with Core CPI month over month and year over year. This will almost certainly shake the market, so we want to wait for the dust to settle before forcing anything.
Volume: Relative Volume is negative 17.4% this morning, which could slightly mute the normal range. However, with CPI on deck, I would still expect the full expected range to be in play.
Range: Expected range is 75 points. We have already moved 42 points, leaving approximately 33 points left in the tank above or below the overnight high or low.
Gamma: We are back in Negative Gamma, with the gamma flip at 7420.00. Below 7420.00, dealers are hedging short. Above 7420.00 - 7420.50, dealers may need to reposition long, which can create an immediate squeeze.
Trend: We remain in a broader bullish trend and price discovery environment, but we are extremely overextended and outside of value. A pullback is not bearish. It is healthy if buyers defend support and bring new participants back into the market.
🧠 Current Market Context
The CPI Shake, Negative Gamma & The 7420 Decision Zone
We have been talking for days about this market being overextended and extremely outside of value. That does not mean the market has to crash, but it does mean a pullback into support would be healthy. A rotation lower would bring new buyers to the table and potentially set up the next move higher in all-time-high price discovery mode.
The key shift today is the gamma flip moving above us to 7420.00. This puts us in Negative Gamma, which is different from the clean positive gamma grind we have had recently. Dealers are now hedging short below 7420.00, and that can create downside pressure. However, the flip level is sitting directly with our 7420.50 4-Hour and 7419.00 1-Hour. That makes this area the true momentum shift pivot. If price pushes above 7420.50, dealers may need to reverse positioning, which can create a fast upside squeeze.
