Bounce Off Of Support: Will It Last? January 30 Stock Market Preview
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Our YouTube video today takes a look at SPX, QQQ, the VIX, META, and SOFI, so check it out by clicking Community at the top of our homepage to get the link to our YouTube channel!
We noted the wide gap between SPX and QQQ’s price and their Hull Moving Averages (HMA), and we also noted the apparent wall at SPX 7000, so today’s drop was validating in regard to the signals we’re watching.
Intraday, the drop respected both the 0 DTE GEX data as well as the potential support areas we noted in our Discord gamma-exposure-update channel, dropping below 6900 but wicking back over the line and over the thick cluster of MAs between 6920-6935. The VIX spiked to almost 20 and then faded back to support at 17.
We can all see that futures are lower, and it’s not surprising to see volatility rebound from where the VIX closed today. With AAPL not moving much after hours, what lies ahead for Friday’s session?
SPX is once again close to the big GEX cluster at 7000. We see three significant GEX clusters expiring Friday: net positive GEX at 6950 (the largest at the moment), positive GEX at 7000, and negative GEX at 6900. Given that we’re back above the tangled cluster of moving averages on my chart, I think bulls will want to see SPX hold above 6920 tomorrow, giving a chance at upside toward 7000. Even better if we gap down and trap bears at the open. Let’s see what happens and consider the 0 DTE picture that unfolds tomorrow morning as well.
Yesterday we said “mean reversion back toward the Hull at 622.92 is possible from this point” for QQQ, and we actually overshot to the downside, reaching 618.27.
Bulls will want to see 623 held tomorrow on any early weakness, opening the door to the upper Dealer Cluster zone at 640.
I still think such a move is likely to not last long, given a variety of factors, but it’s a live target and it’s higher than where we are, so we’ll take it one step at a time.
IWM touched the 260 area that we’ve been repeatedly referencing as the upper edge of an “ideal” reversal area, recovering nicely from that point to close at 263.37.
The downtrend is raising some concerns as we see the HMA having rolled over, now serving as resistance.
Any upside move needs to overtake 267 to flip bullish. I think it’s more likely that near-term bounces are rejected, though the candle wick today may be an indication that IWM is ready to continue higher (which brings us back to what happens at 267).
With AAPL having reported earnings after the bell, and at least the headlines emphasizing an earnings/revenue beat, we haven’t seen much of a reaction. Glancing at the GEX picture from today, which at least gives some context (with risk of changing tomorrow), bulls might want to see 250 hold to preserve potential to reach 270-280.
The daily pattern since December for the VIX has been a series of ongoing higher lows and higher highs, which is concerning. Bulls should really desire to see a pattern shift here with the VIX breaking below the trend line and making a consecutive pattern of lower lows to signal that we can return to the days of the VIX being stuck in the 13-15 range.
The spike today reached 19.7, still basically within the 17-19 range we were looking for, but this initial move and rejection doesn’t help us in terms of what comes tomorrow. Today’s close was just below the 16.88 HMA, close enough that we could see a rebound back above the line again.
The 4-hour chart shows the VIX at a thick area of potential support, backing the notion that the daily chart and other timeframes lend credit toward volatility attempting a rebound here..But will it hold? Rejection and moving below 16.50 may send the VIX down to 14.5-15, but the bias is higher for volatility as long as we are above 16.9.
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