The ES Wants 7800, But Quad Witching Could Have Other Plans

Get instant access to our partners’ real-time market data and insights not available anywhere else. Here is last night's Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. - MrTopStep

Founder's Note:

Stocks and bonds rebounded following the FOMC, while falling oil prices also helped support the market rally. The semiconductor sector (SOXX +3.4%) outperformed, lifting the tech-heavy Nasdaq (QQQ +1.7%).

SPX traded within a narrow 46bps intraday range following this morning’s major gap higher. The close at 7,638 (+1.1%) puts SPX back above our Risk Pivot of 7,590. The volatility complex reset toward the lows, with VIX closing in the 15 handle (-13%) and VVIX closing at 88 (-8%). It’s notable that VIX remains highly volatile, with its percentage change today more than ~5x greater than the percentage change in the S&P 500.

One notable 0DTE position today was ~20K customer-bought 7,550 puts, which opened around 10:00 AM ET. This large 0DTE put position likely contributed to the ~$10bn of negative S&P HIRO delta flow on the day, suggesting net market-maker selling pressure. However, that selling pressure was absorbed by other market participants, and the market steadily ground higher throughout the session.

The ~$10bn of negative S&P HIRO flow was a combination of 0DTE put buying (light blue line) and 0DTE call selling (green line), indicating tactical nature of the flow. Tomorrow is September Triple Witching OPEX, when ~20% of total U.S. options are set to expire or roll. In delta-notional terms, September OPEX is set to surpass June’s record triple-witching expiration. At the index level, we will monitor large institutional rolls and position closures using TRACE and HIRO

On the other hand, S&P Equities recorded approximately +$3bn of delta flow on the day, driven by longer-dated call buying. More than half of this bullish single-stock flow came from Mag 7 stocks. Although the Fed raised interest rates yesterday, the Mag 7 companies have strong fundamentals and balance sheets that could help them perform in this high-rate environment.

Fixed-strike vols declined by 2–3 vol points as FOMC event volatility was released. The sharp decline in SPX implied volatility provided an additional tailwind for the stock market rally. SPX ATM IV for tomorrow’s Triple Witching OPEX is 13.8%, implying an ~86bps intraday move.

In yesterday’s Opening Setup, we highlighted MRNA long vol and CRWV shorts, which are two of the winners of the day.

Moderna (MRNA) rose 9% on the day alongside a massive 5–7 vol-point spike. The long-volatility trade performed well, with MRNA 1DTE 150 calls rising 326% on the day as an example.

We also flagged bearish positioning in CoreWeave (CRWV), and the stock fell 4% despite the overall AI rally on the day.

©2025 TenTen Capital LLC DBA SpotGamma

All TenTen Capital LLC DBA SpotGamma materials, information, and presentations are for educational purposes only and should not be considered specific investment advice nor recommendations. Futures, foreign currency and options trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing one's financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. VIEW FULL RISK DISCLOSURE https://spotgamma.com/model-faq/disclaimer/

ES-Z Levels

The bull/bear line for the ES is at 7692.25. ES is currently trading around 7718.25, keeping the overnight bias bullish while price holds above this key level. Buyers want to see 7692.25 continue to act as support on pullbacks.

The first resistance is 7722.25. A sustained push above that level opens the door to 7750.75, today’s upper range target. If buyers clear 7750.75 and hold above it, the next major upside resistance is 7806.00.

On the downside, initial support comes in at 7707.25, followed by the 7692.25 bull/bear line. Losing 7692.25 would weaken the bullish setup and expose 7663.25, followed by 7633.75, today’s lower range target.

Below 7633.75, additional support sits at 7624.00 and 7617.50. A break below that support zone would increase downside pressure and could bring 7579.50 into play.

Overall, the ES maintains a bullish bias above 7692.25. Holding above 7707.25 keeps buyers in control for a move through 7722.25 toward 7750.75. A failure back below 7692.25 would shift the near-term advantage back toward the bears.

NQ - Z Levels

The bull/bear line for the NQ is at 29654.00. NQ is trading firmly above this level during the Globex session, keeping the short-term bias bullish. As long as price holds above 29654.00, buyers remain in control and pullbacks can be viewed as potential support tests.

On the upside, resistance comes in at 29888.25, followed by 29964.75, which is today’s upper range target. A sustained push through 29964.75 opens the door to 30257.00. The 29888.25 level is the first important hurdle bulls need to clear.

Initial support is at 29793.25, followed by 29743.00. Below there, the key bull/bear line at 29654.00 becomes the major support level. Losing 29654.00 would weaken the bullish setup and could shift momentum toward 29343.25, today’s lower range target.

Below 29343.25, additional support comes in around 29271.00 and 29247.75, with 29051.00 as the next major downside level.

Overall, the NQ remains bullish above 29654.00. Holding 29793.25–29743.00 keeps the path open for 29888.25 and the 29964.75 upper range target, while a break back below 29654.00 would signal a meaningful deterioration in the intraday setup.

Polaris Trading Group Summary - For Thursday, September 17, 2026

Thursday’s session was a strong example of the market doing most of its meaningful work outside regular trading hours. The overnight rally fully reversed the prior Fed-driven weakness, validated the room’s long-cycle bias, and completed key upside cycle objectives before RTH. By contrast, the regular session offered poor trading rhythms, reinforcing the value of patience, capital preservation, and taking profits when favorable opportunities are available.

Overnight Action and Market Context

• ES staged a powerful overnight recovery, reclaiming the Cycle Day 1 low at 7643.50 and pushing back toward the prior 7699 high.

• David viewed the initial post-Fed shock and panic selling as having been absorbed by stronger hands.

• The room maintained an underlying long bias unless market dynamics materially changed.

• Globex once again produced the major directional move, with ES already covering roughly 130% of its 10-day ATR before the regular session.

• David highlighted the importance of recognizing that significant opportunity increasingly occurs during overnight trading: “Markets never sleep.”

Cycle Targets and Positive Results

• The 7693 Cycle Target was fulfilled during the morning rally.

• The upper penetration target at 7714 was also reached.

• The 3-Day Cycle statistic remained strong at 92.25%.

• By the close, David confirmed a positive 3-Day Cycle with the projected targets achieved and the cycle statistic secured.

• Traders who acted on the Cycle Day 2 downside dislocation with a short-term bullish position were rewarded by the sharp overnight recovery.

Key Trading Setup

• David reiterated one of his preferred cycle setups: looking for a Cycle Day 2 call opportunity following a severe downside dislocation.

• Wednesday’s sharp decline provided the type of emotional washout that can create favorable conditions for a subsequent recovery.

• Thursday’s overnight reversal demonstrated how quickly price can normalize after panic-driven selling when the larger cycle structure remains constructive.

• The lesson was to stay aligned with the cycle framework rather than allowing short-term emotional price action to override the broader setup.

Regular Trading Hours

• RTH conditions were considerably less attractive than the overnight session.

• Traders noted the need for patience as the session developed, with market structure offering limited clean opportunities.

• David ultimately described the regular-session rhythms as poor and not deserving of his capital.

• Rather than forcing trades, the emphasis shifted toward protecting capital and waiting for better conditions.

Closing Action

• A $4.3 billion Market-on-Close buy imbalance appeared late in the session.

• The imbalance began pairing off into the close.

• Price approached the referenced D-Level near 15.75.

• David emphasized taking advantage of available liquidity with the reminder: “Sell when you can…not when you have to.”

Lessons From the Day

• Overnight price action can contain the highest-quality opportunity, particularly following major news-driven dislocations.

• Strong cycle structure can provide valuable context when short-term sentiment becomes extreme.

• A large prior-day selloff does not automatically invalidate a bullish cycle thesis.

• Once important targets are fulfilled, traders should focus increasingly on protecting gains rather than chasing additional movement.

• Poor RTH conditions are a valid reason to remain inactive; capital does not need to be deployed simply because the market is open.

• Patience and selectivity remain core advantages. Thursday rewarded traders who recognized the Cycle Day 2 recovery setup while avoiding unnecessary participation once the session became slow and difficult.

DTG Room Preview – For Friday, September 18, 2026

Market Overview

• U.S. equity futures are modestly higher as crude oil falls roughly 2%, easing near-term inflation concerns and improving risk sentiment.

• Energy remains a key market driver, with gasoline prices still elevated and geopolitical headlines capable of quickly reversing sentiment.

• Treasury yields and Fed commentary will also be closely watched following the latest rate decision and overnight strength in global bond markets.

Global Markets

• The Bank of Japan raised interest rates to a 31-year high, marking a significant shift in global monetary policy.

• Asian currencies strengthened, adding another factor to watch for U.S. dollar flows and multinational stocks.

• AI remains a major market catalyst, with regulatory commentary and continued debate around semiconductor demand keeping NQ sensitive to headlines.

Volatility and Positioning

• Volatility contracted during Thursday’s U.S. session.

• The ES five-day average daily range increased to 88.25 points from 83.50 points on Wednesday.

• There is no significant whale bias this morning due to light overnight large-trader volume.

• Geopolitical developments involving Iran, Ukraine, Israel, the West Bank, and presidential social media posts remain potential volatility events.

ES Technical Setup

• ES has moved back above the midpoint of its short-term downtrend channel, giving both bulls and bears room to operate.

• The 50-day moving average at 7707.50 has capped price for four consecutive sessions.

• ES traded above the 50-day moving average overnight, putting 7707.50 in play as both potential support and resistance today.

• Channel support remains around 7615–7618.

• Channel resistance remains around 7765–7770.

Key ES Levels

• Resistance: 7765–7770

• Higher resistance: 7960–7965

• Support: 7615–7618

• Lower support: 7555–7560

• Major lower support: 7405–7410

Economic Calendar

• 9:15 a.m. ET: Capacity Utilization Rate

• 9:15 a.m. ET: Industrial Production

• 10:00 a.m. ET: CB Leading Index

• 9:30 a.m. ET: Fed Governor Michelle Bowman

• 11:45 a.m. ET: Kansas City Fed President Jeffrey Schmid

Earnings

• No corporate earnings of interest are scheduled today.

Trading Focus

• Watch crude oil for shifts in inflation and risk sentiment.

• Monitor Treasury yields and reactions to Fed commentary.

• Expect continued headline sensitivity around geopolitical developments.

• AI and semiconductor headlines remain important catalysts for NQ.

• The overall setup remains constructive but fragile, with headline-driven volatility likely throughout the session.