The S&P 500 has reached the day’s peaks with a 3.1% increase. In parallel, the Nasdaq has surged by 4.2% as buying activity intensifies.

Market observers are closely monitoring the futures overnight high of 5865. Currently, the index is just 6 points away from this target.

New Capital Reverses Initial Selling

The rally is notable as initial selling has been countered by new capital entering the market. Investors have shown strong interest, leading to this upward momentum.

In essence, the current movement reflects a decisive response to earlier pressure. What began as a tentative session with downward momentum has clearly reversed, driven by inflows that continue to underpin the broad upward extension. The benchmark now hovers just shy of technical resistance from the previous overnight high, suggesting that participants are not merely reacting but leaning into the strength on display.

Gains in the technology-heavy Nasdaq outpacing those of the S&P 500 offer us a clear signal market participants are concentrating exposure in more growth-sensitive corners. This can happen when risk appetite rises rapidly, pushing traders to seek assets with wider potential returns. It also tends to cause momentum signals to build, reinforcing current directions until profit-taking or macro shifts adjust positioning.

There is a pattern repeating itself here. First pressure, then absorption, followed by momentum reinforced through sustained buying. It may not come as a surprise that short positioning is giving way under this pace, especially as we approach expiry windows. With vol curves flattening and realized prints continuing to recede, the shift toward gamma neutrality becomes increasingly visible in larger tick sizes and smoother upward glide.

Importance Of Option Flows

From our position, this is where option flows tend to take on outsized importance. Calls previously seen as unlikely to be reached have moved closer into play, dragging dealers toward hedging paths that were less likely just sessions ago. Gamma exposure climbing reinforces a directional bias that may last until open interest resets at next week’s quarterly. We’re not yet at the point where skew reverses, though it narrows slightly as upside demand grows at a faster clip than downside protection unwinds.

What we must watch now is whether strength through this short-term ceiling attracts immediate continuation or causes some participants to de-risk modestly into the rally. Should we clear the identified level with volume support, the next zone to monitor lies in the 5890 to 5910 buffer, which aligns with previous consolidation zones. Notably, volatility sellers have returned in force, suggesting comfort with short-term containment unless a fresh macro catalyst hits.

The price action of today is not isolated. We’ve seen similar rhythm this quarter, where moderate declines attract liquidity, forcing a rebound that overshoots previous resistance. When this happens repeatedly, it fosters a self-reinforcing bias, especially in derivatives, where open interest clusters shape directional range.

In short, flows continue to tilt constructive unless we revert below 5820—where much of the day’s participation found its base. As current pricing creeps ever closer to the next measured projection, and with implied vol still lagging realised, spreads remain efficient but tightly wound.

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