Tech (XLK -3.9%, XSD -5.%) is putting massive pressure on the overall market (SPX -0.6%), which is still holding up remarkably well (equal-weighted S&P 500 basket only down 0.3%).

However, from a gamma standpoint, caution is warranted: Dealers have slipped into a short gamma environment once again, and spot (7,590) is now trading below the "flip level", located at 7,661.

Between 7,600 and 7,500 (see chart above), liquidity will become increasingly scarce, as option dealers will be forced to delta-hedge their exposure pro-cyclically. This means dealers will sell futures into weakness and flip to buyers on strength, which could greatly amplify volatility.

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