Midday market 05/26: Short-cover rally ahead of the holiday

“AI Mania” drives tech rally in panic buy wave

“AI Mania” continues in the final trading session of the week with mega-cap tech block continuing to receive inflows from investors after positive news on debt ceiling deal creating a strong short-cover rally in the day. 340 gamma level, where the most gamma is concentrated in today's QQQ expiration, was broken right from the morning open, strongly compressing VIX and creating clear panic cover pressure from previously entered put hedges - most of this put volume was prepared by investors for the debt ceiling raise event. Immediately after, call wall moved up to 350 and with almost no put volume blocking above 340 (green), continuous buy and cover pressure pushed not only QQQ but the entire mega cap tech block to rally non-stop in the morning.