Good morning. You can find the link to my IV/MM composite charts here:
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Overnight analysis reveals a perfectly balanced OMM regime alongside a slight-ceiling collapse composite regime between the MM and IV dimensions. We encountered passive resistance at our IV wall zone, which presents a potential high-probability session cap based on MM hedging requirements.
The primary expectation centers on maintaining this resistive zone as the high of day, with potential targets at the 561 peak center extending into our 560 pivot. We're monitoring two critical sets of pivotal levels: the first between the peak center and overnight PML, and the second at the overnight MM deadzone centered at the 560 strike, both serving as critical support levels.
Should the pivot break, we anticipate substantial short trend acceleration into the 557 IV wall target zone. Conversely, if price breaks beyond the 563.8 overflow and develops unbroken support at the IV wall zone, continuation toward the 565 max fear zone becomes viable.
Worth noting: neutral regimes typically generate lower volatility and create a "molasses" effect where price becomes range-bound for the majority of the session, potentially producing sub-average daily ranges. Fortunately, SPY's regime appears to allow for greater volatility, suggesting the range dampening effect may be more muted than if both symbols were operating in perfectly neutral regimes.
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Overnight structure shows a developing ceiling collapse regime on the MM dimension, with a more balanced regime when layering both MM and IV dimensions. The ceiling collapse regime typically functions as an "upside suppressant," generally preventing significant long exploration outside the predefined MM range.
We're approaching a critical decision point within today's structure as we compress within the IV wall zone. Our structural expectation suggests upside will be strongly limited, indicating reversion potential either from the current IV wall resistance zone or the high-probability cap between our overnight ceiling and max fear levels.
If the developing IV wall support breaks early in the session, we could see continuation short movement from the 630.89 IV wall into the 627.7-9 peak center zone and our overnight MM deadzone pivot. Similar to QQQ, if pivot support fails, we anticipate fast-paced acceleration toward the inner IV wall and weekly PML, with potential for a supportive bounce at the short-side boundary of the MM range or positive exposure looming below the overflow.
Should the IV overflow resistance break early in the session, continuation into the high-probability cap zone becomes likely, with secondary cap interest at the weekly ceiling level if initial resistance fails to hold.
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Overnight action has produced a successful breakdown of the "reversion trigger" supportive level. Historically, breakdowns of these structural triggers enable continuation into the 223.5 peak center or the overnight deadzone/weekly PML pivot level.
Below the pivot, we expect short acceleration into the overnight PML/IV wall support zone, creating potential for positive exposure beyond the 220.8 IV overflow. If the reversion trigger box cannot maintain as resistance, a potential trickle-up effect driven by passive MM hedging could develop, driving price toward the overnight high/max fear zone. However, the general high-probability expectation remains reversion to the pivot level that has been "triggered" during pre-market action.
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