"We've Broken The Box" - These Are The Key Levels To Watch As Stocks Slump

"We've broken the box" this morning in equities...

But, while dip-buyers were in yesterday, this morning not so much as SpotGamma warns traders " don't be a hero."

A move into the 6,600s is easy from here, and rallies are likely to be quite unstable given the global and lurking credit uncertainty.

Neither of those problems are going away in the short term, and that likely keeps a bid in volatility. 

When we see some form of stability, we will likely drop the Risk Pivot from 6,900 to likely somewhere <=6,800. Not yet.

Given the uncertainty, SpotGamma sees no reason to buy SPX dips near 6,800 as risks are too high with negative gamma below, and volatility simmering.

Should SPX drop into the 6,600s & VIX goes >=30, then we may elect to get into call structures. If there is a bounce, 6,900 remains strong resistance.

Key SG levels for the SPX are:

• Resistance: 6,800, 6,820, 6,860, 6,900

• Pivot: 6,900 (bearish <, bullish >) updated 2/26

• Support: 6,700, 6,600 We currently (3/2/26) look for a move into the 6,600s as a "wash out" low

Negative gamma still troughs in the 6,600s, and a move to that level still seems calibrated to meet VIX 30.

That's where we think equity re-entry gets interesting, as negative gamma dot he downside exhausts and VRP could be fat enough to get interesting.

With that in mind, 6,600s is where it may make sense to play some long delta ideas, but until then we are more in the "sell the rip" camp vs buying dips. On this point, yesterday's dip was bought oh-so-strongly, but that flow was dominated by put selling.

Put selling is short covering, and that makes for unstable rallies.