Market Ready for a Technical Test to Further Strengthen Bullish Pattern, With 5 Stocks Poised for Gamma Squeezes to Leverage the Ride

The Strategy That Beat the S&P 500 for Decades

Bullish momentum returned to the stage as a moderate nonfarm payroll gain reassured investors of an upcoming rate cut without recession risks. The Nasdaq Composite notched a fresh record high Monday, supported by strong technicals, while the more heavily weighted Nasdaq 100 has yet to reclaim its own record. The S&P 500 is trading near its peak as investors await Thursday's CPI data and next week’s Fed decision, both of which are expected to fuel the rally further. Here’s a look at the technical setup and 5 stocks that could benefit from a gamma squeeze to accelerate near-term gains.

The Nasdaq Composite reached a new intraday high Monday, led by small and mid-cap names rather than the larger caps. OCTO, for instance, surged 3000% after adopting Sam Altman–backed Worldcoin as a treasury asset. The speculative mania reflects renewed enthusiasm around asset tokenization and partnerships with high-profile names. From a technical standpoint, the broader index continues to form a traditional bullish pattern of higher lows and higher highs, making investors more comfortable adding exposure. The RSI sits at 66.5—elevated but not extreme—suggesting optimism remains intact, with no disruptive headlines overshadowing expectations for a Fed rate cut to support sentiment.

Large-cap tech, however, faces more skepticism. After a strong rally this year, valuations already look stretched, raising doubts about how much further the AI boom can extend their upside. The Nasdaq 100 remains in a bullish formation but still trades below its mid-August peak, a key resistance level. This explains why investors are increasingly rotating toward small and mid-caps, where speculative opportunities appear more compelling.

The real driver in the coming days could be Thursday’s CPI report and next week’s Fed meeting, though surprises are unlikely. After several reports showing inflation either cooling or in line with expectations, it has become clear that tariff-driven price pressures are more contained than feared. The Fed chair has described them as more of a “one-time” impact. With a still-tight labor market, markets are fully pricing in a rate cut next week, with 88% odds of a 25-basis-point move and 12% for 50 basis points. Such a step would signal the beginning of a new easing cycle and provide further support for risk assets. Once uncertainty turns into certainty, investors are ready to cheer.

In the near term, a handful of stocks are standing out as potential gamma squeeze candidates. A strong bullish sentiment has already sparked aggressive call buying, forcing market makers to hedge by purchasing underlying shares, which could drive further upside.

Robinhood (HOOD) jumped 16% Monday after being added to the S&P 500, yet investors are betting on more gains. Nearly 129,000 out-of-the-money $125 calls remain open, the third-most-active contracts expiring this Friday, implying about 6.5% upside from Monday’s close. With the stock trading just below its August high, a breakout above resistance could validate further momentum.

Broadcom (AVGO) surged following solid earnings and a $10 billion OpenAI deal to launch chips next year. Call option activity expiring Friday is heavily concentrated in out-of-the-money strikes, with 5,952 and 5,485 contracts on the $350 and $360 calls respectively, plus another 4,713 at the $370 strike—well above the current price.

Palantir (PLTR) is showing a similar setup, with aggressive call buying spread across out-of-the-money strikes expiring this week. Roughly 250K and 172K contracts remain open on the $167.5 and 170 calls, the second/third most active across the market. The stock has been consolidating recently, which could set the stage for a breakout if momentum accelerates.

TSMC (TSM) has seen nearly 5,300 contracts of the $250 calls expiring this Friday, compared with 4,697 in-the-money $245 calls, making them the most active. Investor positioning reflects confidence that as long as AI chips remain in focus, TSMC will continue to benefit. The stock is trading just below its all-time high, and a breakout would reinforce a bullish pattern.

Eli Lilly (LLY) is not as strong as the others but still shows bullish positioning. There are 1,053 contracts outstanding on the $750 calls expiring this Friday, compared with 912 at-the-money calls in open interest. This imbalance suggests room for a momentum push if bullish bets intensify.