SPY Bounce or Bull Trap? Monday’s Trendline Decides Oct. 13SPY Oversold Bounce or Just Another Trap? Watch This Trendline Monday
Friday’s session was brutal — SPY sank nearly 3%, printing a full-day liquidation move after the volatility spike tied to the tariff shock. But after hours, something interesting happened: buyers finally showed up around the $650 zone, a level that matches both key technical and gamma support.
Heading into Monday, the market sits at an inflection point. Let’s look at the 15-minute structure for intraday momentum and the 1-hour GEX map for broader positioning clues.
15-Minute Intraday Technical View
SPY has been stuck in a clean descending channel, printing lower highs and lower lows for three straight sessions. But the 15-minute chart shows early signs that the selling pressure is slowing down.
The MACD histogram flipped from red to light blue, hinting at a loss of bearish momentum. Meanwhile, Stoch RSI has curled back up sharply from the oversold zone near 20, pushing toward 80 — a signal of short-term strength returning.
Right now, the key battle zone is the 655–657 trendline area. If SPY breaks and closes above it, that would confirm a mini intraday reversal setup. Above that, potential targets are 661, 666, and 673, where the upper trendline and prior liquidity pockets sit.
But if SPY fails at the trendline and rejects under 652, the next leg down could test 646–642, which is the deeper gamma and liquidity floor from Friday’s crash.
Scalp bias:
* Long above 657 → target 666–670 (gap-fill zone).
* Short below 652 → target 646–642 (continuation leg).
The structure suggests that Monday’s open will likely start with a volatility-driven reaction — expect either a strong bounce into resistance or a failed retest that sets up a fresh low.
1-Hour GEX Analysis — Options Sentiment
This is where things get tactical.
Friday’s selloff drove SPY into deep negative gamma, which forces market makers to sell into weakness. The HVL (Highest Volatility Line) sits around 660, making it the key pivot where volatility could begin to unwind if reclaimed.
Below that, there’s a cluster of Put Walls between 651 and 646, marking heavy hedging zones — this aligns perfectly with Friday’s low and the current support region. That area is the line in the sand for bulls.
Above, Call Walls start showing up around 674–680, which represent dealer resistance and likely gamma caps if the market tries to squeeze higher.
IVR sits at 28.7, and IVX is around 21.2, meaning volatility remains elevated but could compress quickly on a bounce. Put positioning (115.5%) is still extreme, suggesting sentiment is deeply bearish — and when positioning gets this lopsided, snapback rallies often follow.
If SPY closes above 660, dealers begin to unwind shorts, potentially fueling a relief rally toward 670+. But a failure to hold above 652 keeps the gamma pressure active, and new lows could form near 642.
My Thoughts and Trade Ideas
The market looks oversold, but not yet safe. SPY is trapped between heavy Put hedging below and resistance gamma above. The risk/reward favors a tactical bounce as long as 652 holds — but traders should treat it as a scalp, not a swing, until volatility confirms a reversal.
For intraday scalpers:
* Long bias: watch for reclaim above 657 with volume — aim for 666–670.
* Bearish continuation: rejection at trendline + VIX > 22 = retest of 646.
For option traders:
* Short-term recovery setup: 660C or 670C, tight expiration (if SPY stabilizes above 657).
* Hedge setup: 650P or 645P, if the market shows risk-off continuation.
This is a “reaction” day, not prediction day — momentum will decide direction early in the session.
Final Take
SPY is sitting right on top of a major volatility floor, where both technicals and options data align. The downside looks stretched, but a weak open could still shake out more stops before any recovery.
Above 657 = relief rally potential.
Below 652 = another leg of pain.
Watch volatility — it’ll tell you which side wins.
Disclaimer: This analysis is for educational purposes only and not financial advice. Always trade your plan and manage your risk carefully.
