Whipsaw And A Fork-In-The-Road: October 21 Stock Market Preview
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Here’s the link to tonight’s YouTube video, if you have a few minutes to hear some complementary ideas on individual tickers and additional analysis of indices.
Friday’s shellacking of VVIX saw continued decline today, fueling a market move above key Hull resistance on the daily charts.
As we approach monthly VIX expiration Wednesday morning premarket, and as we begin earnings season, a number of potential catalysts exist that could either spur a solid break of the trend since April with a move lower, or a continuation to new highs as we complete the first month of the final quarter of 2025. We already covered the statistical odds that this week ends negative in yesterday’s newsletter, so from this point on, we’ll focus on actual developments as they emerge.
Important tech names reporting this week include NFLX and TSLA, though most of what we’ll see this week are more defensive in nature: KO, MMM, RTX, PG, and a few other industrials, transports, and financials.
The weekly VIX chart shows the VIX already near the big GEX cluster at the 18 strike, also close to the rising weekly Hull Moving Average.
Volatility bulls will want to see the VIX stage a comeback from 18, eventually surpassing 25, while index bulls will want to see a break toward 15, or at least a lower high around 20 and then proceeding toward August/September VIX lows. The VIX hasn’t closed below the weekly Hull in 9 weeks, so market bulls technically have the more significant change to prove here at the 18 strike.
The VIX is near the bottom of the 2-hour Keltner channel, and actually the last bar closed above the Hull, so we may be imminently near a rebound attempt for the VIX. What happens after a rebound begins may be more important than if a rebound happens.
We’ve seen previous VIX expirations close around the zero gamma line, so a rebound that stalls around 20-21 would be very fitting, seeing a lot of premium at 18-20 expire worthless.
VVIX (measuring the future expected volatility of the VIX itself) is also near the bottom of the 2-hour chart, though the Hull hasn’t yet caught down. VVIX stalling in the 110-115 range would mean a rejection of the retest toward an important line in the sand.
SPX is quite some distance above the Hull, which usually doesn’t last very long, ultimately seeing a reversion toward the line, whether that means the Hull rises as price stays flat, or price drops toward the Hull.
Given the nature of the Hull barely flattening after a steep retreat, the odds would seem to favor SPX dropping toward the 6650 area before another decision is made, though a loss of 6700 is key toward that possibility.
SPX is within the lower limit of the upper Dealer Cluster zone, which stretches up to 6800 and slightly beyond. Tagging the higher limit is certainly possible before a pullback occurs, so we will await further signals on a 0 DTE basis tomorrow and Wednesday.
SPX saw a sharp rise in net GEX.
Previous GEX highs have typically marked reversal areas, though SPX is not yet near an extreme reading when compared to GEX readings over the last 52 weeks.
QQQ paints a similar picture to SPX in terms of being stretched above the Hull.
QQQ’s upper Dealer Cluster zone extends to 620, so upside potential of 1.5% or so does exist.
GEX seems to point toward a retest of 600, or even 590.
One interesting data point is that QQQ shows a slight decrease in net GEX today despite the big rally. Other indices showed slightly (or dramatically) higher GEX. Which index is painting the more accurate picture?
We’ll continue monitoring the 0 DTE picture and we hope you’ll join us in Discord, where we share information throughout the day.
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We posted a YouTube video today, as mentioned at the beginning of the newsletter, and we have useful and educational playlists, so give our channel a look if you’re curious about recent market commentary and ideas as well as gamma (GEX) concepts explained.
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