Chips Give Back Monday's Bounce, and SPX Opens 12 Over Its Put Wall

The chip bounce lasted one session. The semiconductor index rose 1.6% Monday to end an eight-day losing streak, then overnight a Korean AI cloud provider called Elice fell 32% in its debut, and Micron, AMD and CoreWeave are lower again premarket. SPX closed at 7,690.73, up 0.41%, after giving back most of a run to 7,731. Premarket 7,672, Nasdaq futures down about half a percent.

Bonds are where this shows up. For two weeks the money leaving chips went into Treasuries, which is how the 10-year fell through a hot CPI and the hottest PPI since 2022. Monday the chips bounced and the 10-year rose about 4 basis points to 5.14%, and with chips lower again it's back to 5.12% this morning. That bid only holds while chips fall, and oil isn't letting up. Brent is near $111 after the Houthis claimed missile strikes on Saudi oil sites including Aramco's Yanbu facilities, and Iran's Revolutionary Guards threatened the data cables under the Strait of Hormuz. GM beat and is still down more than 6% on a narrowed profit guide, with about $2 billion of commodity costs, chips and logistics included. Housing data this morning, Netflix after the close, Meta and Tesla tomorrow.

No cushion in this profile. Premarket sits 43 under the 7,715 flip, and every strike from the flip down to 7,600 is negative, with the heaviest of it packed within 30 points of price. The 7,660 put wall is only 12 under, and 7,665 and 7,650 nearly match it, so it's the most reactive spot of the day but a thin floor once it goes. Dealers chase moves in this zone. Overhead the call wall at 7,735 sits on the 20-day and Monday's 7,731 high, with little positive gamma above it, and that's where yesterday's rally turned.

The lean is short, sold on a bounce into 7,697-7,705, where the 8-week and prior demand meet the 50-day under the flip, not on the open 12 points over the put wall. A break of 7,655 runs to prior demand at 7,631, Friday's low. A hold back over the 7,715 flip ends it, and with Netflix tonight and Meta tomorrow there's no case for pressing shorts into the 7,735 wall.