Increasing Odds Of A Pullback: How Deep? October 22 Stock Market Preview
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Here’s the link to tonight’s YouTube video, we take a look at a day trade we conducted today as well as analysis of the larger indices, the VIX, and some individual tickers.
As we enter VIX expiration tomorrow morning at 9AM ET, we see the VIX showing signs of an attempted reversal on the 4-hour chart, with the Hull crossing below the VIX and the latest candle indicating indecision near the lower Keltner channel.
The weekly VIX chart we’ve been watching also shows the VIX holding above the weekly Hull, maintaining the potential for a volatility rebound from the 17.69-18 area.
We see diminished volume below 17-18, potentially indicating limited interest amongst participants in lower VIX levels currently.
While monthly VIX options expiring premarket may keep the VIX somewhat near the 18 level, a break in either direction immediately following 9AM ET (or after the cash session opens) may be indicative of momentum into the end of the week.
IWM continues to appear fairly bullish on the daily charts, but the weekly chart reveals an important line-in-the-sand just overhead at 247.45, the weekly Hull. IWM has remained below this line for 2 weeks prior, so IWM really needs to turn this line into support (and furthermore, the GEX cluster at 250) in order to have more confidence in a bullish break toward 260+.
Remaining below 248 increases the risk of a drop toward the larger negative GEX clusters at 245 and 240, and we still see heightened daily volume below 240, along with net GEX remaining negative.
SPX remains stretched above the daily Hull far enough to view a move back toward the line as a high probability event, though bulls can have a little more confidence as the Hull is starting to turn higher again.
Will SPX be able to test levels below 6650-6700? The verdict is still out and the burden is on the bears to prove that the potential shift in trend lower has legs.
QQQ saw GEX decline for the 2nd day in a row, now dipping back into negative net GEX territory.
While negative, we don’t view QQQ’s net GEX reading to be negative enough to indicate a solid trend, but rather a volatile neutral zone, characteristic of many periods this year despite the underlying uptrend.
QQQ also remains quite stretched above the Hull, so a drop back toward 603-604 or even lower toward 600 would not be surprising. We see futures slightly lower after hours following the NFLX earnings report, and we have TSLA Wednesday after hours, so a number of potentially influential earnings reports lie ahead.
Join us in Discord tomorrow and we’ll share some of our observations as we get indications from GEX on a 0 DTE basis!
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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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