The last time the ES closed down more than 1.23% was July 29, 2026, when it fell 1.55%; the last time the NQ closed down more than 2.88% was June 5, 2026, when it plunged 5.09%; and the last time the ZB closed up more than 2.10% was March 10, 2022, when it rallied 2.78%.

Sometimes there are clues to the overall health of the stock market, whether it be mega-cap concentration, rising debt, higher interest rates, weak market breadth, higher energy prices, geopolitical concerns, or the midterm elections. I have said this a million times: I am not an economist. In fact, I don't fully understand how some things matter and others don't, but what I do understand is that the ES and NQ have been going up for four years, and there is no way the markets can just overlook all the negatives.

The PitBull called me and told me that 59% of the stocks in the S&P 500 are 20% off their highs. I didn't tell him that was a story that came out around October 10th or 12th, which would have been before the Nasdaq fell 4.5% and the S&P sold off 2% last week, neither of which would include Thursday's decline.

As I pointed out in yesterday's OP, the NQ was underperforming versus the ES this week, as it did again on Thursday. I think the big standout was the story about META falling 6.98% because it may be looking to raise cash after the company reported Wednesday that its free cash flow turned negative. That pushed investors to dump AI-related stocks and triggered a massive rotation into the Russell and bonds, while Apple made new highs. META traded up to $748, or up $50.48, after it reported earnings and closed at $648.85, down 48.67 points. It plunged $99.15 per share, or 13.26%, from Wednesday's after-hours high to Thursday's close on a $700 stock. The bonds (ZBZ26), which made a low at 101-05 on 10/07/2026, made a high at 107-28 and settled at 107-24, up 2-07 points, or +2.10%. Will the Fed raise rates during the October 27–28 meeting? As of yesterday's close, Fed funds futures showed the probability of an October rate hike had plummeted to just about 5%.

I want you to look at the graph below of these stocks: $SOXL $Q $GEV $SNDK $CIFR $CRWV $IREN $WULF $NBIS $APLD

This is just a small list, but you have to ask yourself how many people are underwater on these stocks?

Magnificent 7, Not So Magnificent: Almost $1 Trillion Lost in 9 Trading Sessions

The purpose of this study is to determine whether sharp Thursday selloffs, when the ES falls more than 1.23%, and the NQ drops at least 2.88%, lead to a Friday rebound—and how strong that rebound tends to be.

Historical ES & NQ Selloff Study — Summary

On Friday, June 5, 2026, the ES fell 2.97% and the NQ plunged 5.09%. Both rallied the next trading session, with the ES gaining 0.18% and the NQ advancing 1.44%. However, neither contract fully recovered its losses.

Another example occurred during the COVID crash on Thursday, March 12, 2020, when the S&P 500 plunged 9.51%, followed by a massive 9.29% rebound on Friday. This was a cash-index example, not a verified joint ES/NQ futures signal.

The takeaway: Sharp selloffs can trigger immediate relief rallies, particularly when traders are heavily short or hedged. However, the rebound does not necessarily signal that the selling is over.

Important: The full historical backtest has not been completed, so there is not enough verified data to calculate how often both contracts rally the following day.

Founder’s Note

Brent Kochuba

A rout in tech stocks and rising oil prices sent the stock market lower on Thursday. Brent crude topped $113 as deadly attacks in Saudi Arabia heightened supply concerns.

The Nasdaq tumbled 3%, led by sharp selloffs in Mag7 (MAGS -3%) and semiconductor stocks (SOXX -7%). Sector rotation continued, with relative strength in RSP (+1%). Meanwhile, traders sought safety in bonds, sending TLT up 2% on the day.

Meta shares sank 8% despite beating revenue expectations and offering upbeat guidance. Its credit risk reached a record high as plans to increase capital spending reignited concerns that tech firms will issue more debt to finance the AI infrastructure.

Last Friday, we highlighted 110K QQQ October 30 $700 puts traded for an estimated $111 million in premium. With QQQ dropping 3% today, these puts gained 193%. We also highlighted a spike in MAGS put buying and a rising put/call ratio ahead of Mag7 earnings. The post-earnings selloff suggests those hedges have paid off so far.

SPX traded within an 86-basis-point range and closed at 7,663 (-1%), below our Risk Pivot of 7,690. VIX and VVIX both jumped 14% on the day, closing at 19 and 108, respectively.

A notable 0DTE position today was the 7K-lot put spread at 7,645. As SPX breached that level around 2:00 p.m. ET, we observed the position being gradually trimmed into the close.

SPX traded within 86bps range and closed at 7,663 (-1%), below our Risk Pivot 7,690. VIX and VVIX both jumped 14% on the day, closed at 19 and 108 respectively.

The notable 0DTE position of the day is the 7K lots put spreads at 7,645. As that level was breached around 2:00pm ET, we noticed that position was gradually trimmed into the close.

On the flow side, S&P 500 HIRO finished relatively flat on the day, although we observed net buying of longer-dated puts (dark blue line). With SPX now below our 7,690 Risk Pivot, 0DTE volatility sellers may be forced to sell into sharp market declines, potentially amplifying downside moves as negative gamma exposure increases.

Fixed-strike implied volatility rose 1–3 vol points across expirations, suggesting increased demand for hedges. This volatility spike differs from what we have seen in recent weeks, as demand for left-tail protection has picked up.

As mentioned in the AM Note, Nasdaq volatility has been elevated relative to the S&P 500. Looking at QQQ's implied volatility term structure, today's curve (teal line) has shifted into backwardation, in contrast to the contango curve observed around September OPEX (yellow line). Moreover, today's term structure has shifted higher relative to yesterday (gray line), reflecting the sharp repricing of implied volatility following the selloff.

About SpotGamma

SpotGamma is an options analytics firm founded by Brent Kochuba in 2020. Its research and proprietary tools help traders understand how options positioning and hedging flows can influence stocks, futures, and major indexes.

SpotGamma profile · Visit SpotGamma · Explore SpotGamma TRACE · Explore HIRO

Thursday started on the back foot and never recovered Wednesday’s settlement. ES opened Globex at 7797.00, reached 7798.75, then sold down to 7710.25 before the cash open. By 9:30 a.m. ET, it was trading at 7729.00. The early overnight high remained the high for the entire session.

The regular session gave buyers a chance to repair the damage, but 7742.50 was all they could manage. Sellers eventually pushed ES to 7676.75, leaving a 65.75-point cash-session range. The last regular-session five-minute bar closed at 7706.25, well below the opening level, despite the recovery off the low.

ES was at 7699.00 at 3:50 p.m. ET and 7707.75 at the 4:00 p.m. snapshot. The official settlement was 7704.50, down 95.75 points, or 1.23%, from Wednesday. The final 5:00 p.m. price was 7703.75. Total session volume reached 2.18 million.

NQ took the harder hit, settling at 29142.00, down 865.00 points, or 2.88%, from Wednesday’s 30007.00 settlement. Its session low was 29033.00. The closing recovery in ES helped distance price from the lows, but it did not undo the damage: both contracts finished below their overnight opens, with technology carrying the larger percentage loss.

MOC Recap: Early Buy Imbalance Gives Way to a Mixed Close

At the October 22 dashboard’s 16:00:00 snapshot, All Markets showed $273.4 million net to sell: $907.3 million to buy against $1.2 billion to sell. The dollar lean was 56.5% sell, while symbol breadth stayed narrowly buy-sided at 327 versus 312. The final balance was mixed, not a unanimous sell signal.

The minute sequence tells the story. At 15:51, the dashboard showed $6.0 billion net to buy, with $7.8 billion of gross buys against $1.8 billion of gross sells. Earlier coverage was only 41 symbols; 15:51 covered 685. That expansion prevents treating the entire jump as fresh demand in an unchanged universe.

The accompanying summary, lean, stock and sector images show that 15:51 snapshot. Nvidia led the buy table at $497.5 million, followed by Micron at $343.4 million and Tesla at $312.1 million. Berkshire Hathaway led selling at $91.1 million. Technology supplied $3.9 billion net to buy, while health care offset it with $133.9 million net selling.

By 15:55, net buying remained $4.5 billion. At 15:56, gross buys dropped to $3.2 billion and gross sells increased to $3.4 billion, producing $164.0 million net selling. Shrinking imbalances can reflect pairing; the reported increase in the sell side is a separate observation, not proof of its cause.

The final dashboard split was NYSE $257.6 million net buying, NQ $535.7 million net selling and S&P 500 $299.6 million net selling.

How the NYSE and Nasdaq auctions work
How to read the MIM

Today at 9:15 a.m. ET: Rich Miller of HandelStats.com joins The Pit.

Watch Rich’s livestream on YouTube

Don't trade the open alone. Join us live in The Pit for free, follow the conversation, and bring your questions.

Economic Calendar

Earnings Calendar

Polaris Trading Group

Polaris Trading Group’s Thursday, October 22 discussion centered on a Cycle Day 1 decline, sharp reversals inside a broader trading range, and staying aligned with the active direction. David’s updates moved from an early repair attempt to an accelerating selloff. The room’s practical emphasis was on selecting clean setups and managing exposure rather than trying to forecast every turn.

Overnight setup and Cycle Day 1

• David said the overnight decline had already fulfilled the lower Cycle Day 1 range objective in the 7721–7718 zone. That was the starting context for the morning plan, rather than a new downside target introduced after the cash open.

• He described the broader market as a trading range that could deliver both sharp intraday reversals and hours of tight movement. The warning was to adapt to the immediate conditions instead of assuming that every directional push would continue.

Morning conditions and the repair attempt

• Before the open, David flagged the A10 setup. The accompanying chart illustrated the room’s setup language and trade-management framework; it was not an independently audited account statement.

• Early in cash trade, David looked for repair of the lost prior low and noted a DLMB setup on the move higher. His later description emphasized reclaims, making the ability to regain a reference level central to that recovery attempt.

The opening range

• The room established an opening range of 7725–7740. Those boundaries provided a defined area for judging subsequent movement rather than an instruction to chase either edge automatically.

• David’s description of “snappy” and “trappy” rhythms captured the difficulty of the session. Fast moves and abrupt reversals made the sequence around a level as important as reaching the level itself.

Trade opportunities and selectivity

• A member asked why an A4 opportunity had not qualified. David answered that it was a second touch, showing that the setup’s conditions mattered even when the pattern looked familiar.

• Later, David explicitly flagged an A4 short in play. A subsequent update said he was working a runner. These were contemporaneous room updates; the written record does not establish a complete entry-to-exit result for every participant.

Execution as selling accelerated

• David then reported accelerating selling and characterized the weakness as normal Cycle Day 1 decline behavior. The tactical discussion had shifted from the earlier repair attempt toward managing the downside move.

• The room also discussed midpoint trading and reclaim behavior.

Positioning and technical context

• David introduced negative gamma positioning and described a potential feedback loop in which market makers sell futures to hedge. This was the room’s explanatory framework, rather than independently verified evidence of the identity or size of Thursday’s actual hedge flows.

• Members asked about put-wall behavior and how to recognize when stabilization might end. The discussion highlighted the need to observe price response instead of treating an options reference as an automatic floor.

Capital preservation and discipline

• David’s recurring instruction was Alignment, Assignment, Attack. The practical lesson was to work from a structured setup, wait for its conditions, and avoid forcing a trade simply because price was moving.

Lessons to carry forward

• The session showed why an initial recovery idea and a later short setup can both belong to one conditional plan. The important distinction is whether price actually reclaims a reference and holds it, or fails and resumes the active decline.

• David linked the look-above/below-and-fail reversal explanation and the PTG glossary for the terminology discussed. The takeaway was disciplined recognition and response, with room commentary kept separate from guaranteed outcomes.

DTG Room Preview

The DTG group approaches Friday, October 23 with a bearish tactical bias after Thursday’s selloff. Its focus is whether ES can reclaim the short-term trendline or confirm it as resistance.

Trendline and moving-average tests

• The group identifies 7715–7720 as the key short-term trendline zone. Holding above it would improve the recovery case; rejection would leave the bearish framework intact.

• DTG places the 50-day moving average at 7766.50 as a higher resistance reference.

• Additional trendline resistance zones are 7895–7900, 7955–7960, and 8034–8039. The lower trendline reference is 7419–7424.

Opening-session watch

• The group reports a bearish large-trader bias on relatively light overnight activity, rather than a confirmed cash-session outcome.

• DTG is watching semiconductor stability, energy prices, and the response to AI spending concerns for signs of stabilization or broader risk reduction.

• Its calendar watch is the 9:45 a.m. ET flash manufacturing and services PMIs, followed by the 10:00 a.m. ET University of Michigan sentiment and inflation-expectations releases.