The bullish scenario from last week's brief played out. NVDA cleared the bar Wednesday after the bell, the Nasdaq powered through its 29,200 call wall on the cover, and the Dow held its gamma flip cleanly. Friday closed with the Dow at a fresh record high.
The S&P put up its 8th straight winning week (+0.9%), the longest streak since late 2023. The Dow added 2.1% on the week. The 10-year backed off its weekly high to 4.56% Friday, easing the rate pressure that had killed the first two sessions of the week.
Kevin Warsh was sworn in Friday as the new Fed Chair. Powell's final FOMC minutes hit Wednesday. The structure built last week delivered, and the back-loaded catalyst stack this week is what decides whether the streak extends or breaks.
Last Week's Question: Resolved
The bullish scenario played out. NVDA cleared the bar Wednesday, the Nasdaq powered through its 29,200 call wall, and closed Friday at 29,481.64. Above the wall but short of the 30,000 ceiling. The Dow's gamma flip at 49,357 held cleanly, and the index ran to a new all-time high at 50,579.70. Hedge funds adding 11,275 Nasdaq shorts into the print got rolled. The structural read called the regime correctly.
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The CFTC report dated May 19, 2026, released Friday before the Iran weekend headlines. Hedge funds remain net short across all three indices. Asset managers are de-risking on the S&P and Nasdaq. The Dow stands out: asset managers added 5,233 contracts to their net short position into the rally that ended at a record high.
What This Means This Week
The pros are still positioned against the rally. The Dow is the standout: asset managers added 5,233 contracts to their net short as the index ran to an all-time high. The S&P and Nasdaq see modest de-risking on both sides. Asset managers trimmed longs, hedge funds covered some S&P shorts but added Nasdaq shorts. NAAIM's verified May 13 reading sits at 77.34, after cutting equity exposure 19 points in a single week. The sharpest single-week defensive shift in months. Professional money is doubting the move. That doubt has been the wrong call for 8 weeks running.
Source: CFTC.gov TFF Futures Only. NAAIM Exposure Index from NAAIM.org. Data as of prior Tuesday, released Friday 3:30 PM ET. Four-day lag applies. COT and NAAIM are sentiment context tools, not trade signals.
Options dealers are required to hedge their exposure as price moves. The size and direction of that hedging obligation creates mechanical support and resistance levels that are independent of fundamentals. All three indices closed Friday in positive gamma. Price above the flip on each. Mechanical support holds on the downside, mechanical resistance holds at the call walls. The notable structure this week: the Nasdaq closed above its 29,200 call wall, an unusual setup where the wall stops functioning as resistance and the index needs a new ceiling to form. The S&P is pinned 27 points below its 7,500 call wall. The Dow has the cleanest runway with its call wall at DIA $510 (~51,000 index).
What This Means This Week
The S&P is 27 points from the 7,500 call wall that has been the structural ceiling. Iran headlines Tuesday open will test it directly. The Dow has the most room to run: 420 points to the next call wall at 51,000. Asset managers are positioned net short into that runway, a setup that tends to compound moves higher as shorts cover. The Nasdaq is the interesting one: price closed above the 29,200 call wall. When that happens, dealer hedging shifts. The wall is no longer resistance, and the index is in open structure until a new wall forms at a higher strike. The market is doing more work than positioning gives it credit for.
Source: Barchart.com. SPX index page (S&P 500), IUXX Nasdaq 100 page (Nasdaq), DIA ETF page (Dow). DIA × 100 ≈ DJIA index level. EOD data, May 22, 2026. Use as structural context, not a trade signal.
Volatility Read
SPX and Dow vol are asleep heading into Memorial Day. Tech vol is awake. VXN at 22.82 versus VIX at 16.70 is the tell. The options market is paying up specifically for Nasdaq movement. Iran headlines Tuesday morning could compress both indices' vol if the gap holds. PCE Friday is the actual resolver. Until then, the system is calm where it has been calm and pricing risk only where the catalysts live.
VIX measures implied volatility on the S&P 500. VXN measures the Nasdaq. VXD measures the Dow and is the most direct read for MYM traders. Under 15 = compressed, low fear. 15-20 = normal. 20-30 = elevated caution. Over 30 = fear or crisis mode. Elevated volatility widens spreads and increases intraday range. Use as a session awareness tool.
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Monday is closed. Memorial Day. The trading week opens Tuesday with Iran deal headlines from the weekend already in the tape.
Tuesday May 26: Consumer Confidence, Durable Goods Orders, FHFA House Price Index, Dallas Fed Mfg. Light data day. The action is the gap open and how the S&P handles the 7,500 call wall.
Wednesday May 27: FOMC Minutes from Powell's final meeting drop at 2 PM ET. First look at how the dissents that preceded Warsh's confirmation actually read on the page.
Thursday May 28: Q1 GDP 2nd estimate, Initial Jobless Claims, Pending Home Sales. GDP confirms or revises the growth picture going into Friday.
Friday May 29: PCE inflation, the Fed's preferred gauge. Personal Income/Spending, Chicago PMI, final Michigan Sentiment. PCE is the resolver event. A hot print kills the rate cut conversation Warsh inherited. A cool print rebuilds it.
The Short Version
4 trading days, 3 catalysts. Tuesday is the Iran gap. Wednesday is the first read on a divided Fed. Friday is PCE. The S&P sits 27 points from its 7,500 call wall on Sunday night. Either the headlines push it through or PCE breaks the 8-week streak. Size accordingly.
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Memorial Day weekend, and gratitude upfront to everyone who served and to the families who carry that weight. The market opens Tuesday. Worth a critical read on what Trump announced Saturday: a deal with Iran has been 'largely negotiated.' Within 24 hours, three contradictions surfaced. Iran's state media (Fars) said Iran will continue to manage the Strait of Hormuz, directly contradicting the announcement. Iran's Foreign Ministry stated the nuclear stockpile is not part of the preliminary agreement. Netanyahu added conditions Trump did not mention: dismantling Iran's enrichment sites and removing enriched material from Iranian territory. This is the third or fourth time the administration has called an Iran resolution 'imminent' since February. Thursday May 21 the tape already rallied on what TheStreet called a 'bogus' draft report. The pattern is consistent: headline up, fade when the contradictions land. The market gaps higher Tuesday on the announcement anyway. The interesting question is what happens later in the week when the deal terms don't match what got announced.
The S&P closed Friday 27 points below the 7,500 call wall with 8 straight winning weeks behind it, the longest weekly streak since late 2023. The structure says the wall holds. Dealers mechanically sell into it. The catalyst stack says a hot PCE Friday is what finally vindicates the hedge funds who have been short the entire run. Either the Iran gap squeezes the wall and forces shorts to cover, or PCE breaks the streak. The interesting layer underneath: asset managers added 5,233 contracts to their net short on the Dow into a record high, while staying long the S&P with added shorts as protection. Long-only money is signaling caution at the top, not capitulation down. Eight winning weeks is the kind of streak that ends either with a melt-up through the wall or a reversal that catches everyone leaning the wrong way. Size accordingly into Wednesday's minutes and Friday's PCE.
JT Smith
Founder | Steady Edge Trading
steadyedgetrading.com
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This Week's Question
The S&P has 27 points to its 7,500 call wall and 8 straight winning weeks behind it. Iran headlines Tuesday open. PCE Friday closes the week. Hedge funds remain net short across all three indices into a Dow record high. Does the gap push the S&P through 7,500 and squeeze the shorts further, or does PCE Friday finally vindicate the doubters and break the streak?
Drop your read in #weekly-macro-brief. Structure is set. Let's see which level breaks first.
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