The market is trading mostly higher today, led by megacap tech stocks, but breadth remains poor with over 345 SPX names in the red. Ahead of the Mag7 earnings season, which starts tomorrow, this cohort has taken the lead. Microsoft (MSFT) makes up nearly 35% of the NDX move, while both Microsoft (MSFT) and Apple (AAPL) join NVIDIA (NVDA) at the $4T market cap table. Meanwhile, Google (GOOGL) is quietly separating itself from Amazon (AMZN) and Meta (META), up 10 of 11 sessions and back into overbought territory.

There is elevated activity at both the micro and macro levels. Equity volumes are on track for their first $20B shr session in 4 days, while ETF volumes are very elevated at 33% of the tape. Despite the elevated volumes, liquidity remains healthy at $13.4mm.

The FOMC meeting is tomorrow, with the GIR expecting another 25bp rate cut to 3.75-4%. However, we do not expect formal guidance about the December meeting, but if Chair Powell is asked, he will likely be comfortable referencing the September dots, which imply a third cut in December.

Our PB data shows that client net leverage is not high enough into a market clipping ATHs on a daily basis. This is evident in the change in call skew (upside chase is on) vs put skew (no reach for downside protection). Bottom line: calls are going bid and puts are going offered – the chase for SPX upside (1m 25dc) has not been this aggressive since post-Trump victory in November 2024.