SPY Coiling Below Gamma Wall — Volatility Loading Into Oct. 6

Market Overview (15-Min Chart)

SPY finished Friday consolidating within a tight descending channel after a strong early session rejection from $672.60–$673, forming a potential bullish flag structure. Price action shows a short-term base developing near $669, with visible liquidity defense and lower wicks suggesting buyers are absorbing pressure.

The MACD histogram is starting to flatten after a deep red phase, while both MACD lines are curling upward — a subtle momentum shift hinting at possible recovery attempts early in the session. Meanwhile, the Stoch RSI is elevated, indicating SPY may attempt another push toward the upper trendline before confirming direction.

This setup paints a picture of compression after expansion, with price resting right below key gamma resistance — a classic sign that the next impulse move could define the week’s tone.

GEX Confirmation (1H Chart Insight)


The 1-hour Gamma Exposure (GEX) data adds crucial institutional context: the highest positive NET GEX and CALL resistance sits near $672–$673, precisely where SPY faced rejection. This confirms that dealers are currently hedging defensively, making that zone a strong ceiling unless sustained volume breaks through.
Below, the PUT support wall is dense between $666–$667, marking the key gamma floor. Dealers’ short gamma positioning means a sharp move below could trigger delta-hedge selling, accelerating volatility.

With IVR at 15.8 and IVX avg 13.6, implied volatility remains low — signaling a potential volatility expansion ahead. Notably, PUT positioning at 64.2% suggests sentiment is still cautious, but this imbalance could amplify a short-cover rally if bulls reclaim momentum above $670.

Trade Scenarios for the Week (Oct. 6–11)
Bullish Case:
If SPY breaks and sustains above $671, it may unlock a clean run toward $673.20 and potentially $676, where the 3rd Call Wall aligns.
* Entry: Above 671
* Target 1: 673.2
* Target 2: 676
* Stop-Loss: Below 668
Bearish Case:
If SPY fails to reclaim 671 and breaks below $667, the path opens toward $665, the next major gamma pocket. Watch for accelerated selling if that level gives way.
* Entry: Below 667
* Target 1: 665
* Target 2: 662
* Stop-Loss: Above 670

Option Insights

The GEX structure shows compression between 667–672, signaling that SPY is coiling before a breakout. With PUT dominance, a short squeeze scenario becomes possible if price holds above $670 and dealers unwind short delta exposure.
Traders could look at call spreads (671–676) for upside momentum confirmation or put spreads (667–662) if downside pressure persists. The low IVR supports directional debit plays with defined risk.

My Thoughts

SPY is sitting at the crossroads of gamma and structure. The $669–$672 zone defines this week’s battlefield — a breakout above could spark a quick volatility pop toward $676+, while a rejection and break below $667 reopens the path to $665 support.

Momentum indicators are neutralizing, suggesting a larger move is imminent. I’ll be watching Monday’s open for a decisive candle: a clean break outside the channel will likely set the trend for the rest of the week.
This is one of those “calm-before-the-storm” setups where positioning and timing will matter more than prediction.

Disclaimer:
This analysis is for educational purposes only and does not constitute financial advice. Always perform your own due diligence and manage risk responsibly before trading.