Pivotal Moment Into FOMC: January 28 Stock Market Preview
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You can find today’s YouTube video by clicking Community at the top of our homepage. Today’s video looks at SPX, QQQ, TSLA, and IWM, so check it out if you have a few minutes!
QQQ saw bullish follow-through after closing above the weekly Hull Moving Average Monday, closing over the important 630 GEX area Tuesday. While today’s close does place QQQ within the upper Dealer Cluster zone, where we expect dealers to potentially become sellers, room exists within the box for QQQ to push toward 640.
640 is also just below the upper Keltner channel, so the confluence of the large GEX cluster at that spot as we head into the FOMC announcement and the eve of several major tech reports could certainly serve as catalysts for a move toward 640.
QQQ is well above the daily Hull though, so mean reversion back to the line could occur relatively quickly after pushing higher, if we push higher first.
SPX has certainly performed better than QQQ over the last couple of months, making a new high, but the action this year has been fairly similar overall, with a setup to achieve higher levels, at least briefly.
The major difference visible at a quick glance is the size of the GEX at 7000 relative to other strikes for SPX to the right of the chart. Nothing comes close. QQQ has no such disparity, with QQQ’s largest clusters all being relatively smaller.
The large GEX at 7000 implies a potential temporary ceiling at that level, with a reasonable assumption that SPX might encounter consolidation at that zone, even if it takes a few days.
SPX’s Keltner channels are bullish, and the upper channel implies a possible move roughly 1% beyond 7000 to 7078, which could still fit within a scenario of a spike and fade back down.
SPX net GEX has rocketed higher, closing Tuesday’s cash session at 1.46B, comparable with early January GEX highs. Note that the early January GEX high was 2 days before SPX’s price high, and a drop ensued thereafter. So we need to watch the change in GEX in coming days and be aware of the possible contrarian implications of really high GEX readings, in some cases.
IWM saw a bullish reversal today, and we remained focused on the large distance between the current price and the Hull at 268.57. IWM has a good chance to fill that gap and retest the 268-270 area. What happens beyond that test is the true key to what comes next.
IWM has been on a GEX downtrend since mid-January, though we saw an uptick today, so shifts in GEX in conjunction with price action will be interesting to watch for the rest of the week.
One thing that caught my eye on our 3D graph is the largest GEX cluster at any one strike for Friday is the negative cluster at 260. The largest positive cluster is at 270, though somewhat smaller in size.
GEX can shift quickly, particularly with FOMC tomorrow, but one pathway that exists as of now is a spike and then drop toward 260.
If IWM does see a pullback to 260, will other indices follow, or does IWM have “Opposite Day” on repeat as QQQ ramps up ahead of Big Tech? We’ll find out soon, and we’ll watch for intraday clues along the way.
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