Concluding Q3 Earnings: October 31 Stock Market Preview
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IWM weakness over the last couple of days appears to be catching up with the blow-off crowd, with SPX and QQQ dropping today. Many recent gap downs have resulted in strong buying, but today’s action ended up with indices closing at or near lows.
The VIX has now closed at or above the daily Hull Moving Average for the 2nd day, leaving two primary possibilities: A continued spike toward 18, with a breach of 18 potentially leading to 20-25 again, or a rejection and retest of the 15-area before another spike.
The 4-hour chart shows a close above the Hull, yet rejection at the middle Keltner channel, so we don’t have a definitive next move.
Even then, the odds seem to favor a bounce in the VIX toward 19.5 before a potential rejection and resumption of the market rally (toward 7000?).
As I write this, we see AMZN positive after hours, and AAPL positive, so perhaps we make a Friday high and then a pullback next week. The VIX may bottom just below 15 if the downside for volatility continues.
IWM closed well below the Hull, though just below the meaningful 245 GEX cluster, also leaning bearish but leaving open the possibility of a 250 retest and potentially higher.
250 is now significant resistance, though a continued drop toward 235 might be a great buying opportunity.
IWM’s net GEX continues declining each day, reaching a deeply negative -1B.
If we see IWM move closer toward the lower GEX extreme, we may see other indices bottoming as well. We will watch for the GEX Intensity Gauge to reach a lower limit and then look at where SPX and QQQ are.
To expand upon that point, IWM breaking 240 may lead to 230-235, though we currently see very little GEX below these strikes, so they currently appear to be good areas for a potential long.
SPX technically closed below the Hull, as did QQQ, opening the possibility of a trip toward 6700. The close was unconvincing, closing barely below the line. A rebound tomorrow may finally tag 7000, or close to it at 6900, whereas a decline will likely target 6800, then 6700.
QQQ still shows meaningful GEX at 650, also matching well with the upper Keltner Channel.
As of now, QQQ needs to retake the big cluster at 630 to have a shot at the upper 550-560 zones.
QQQ dipped back into negative GEX territory, which can be helpful when it reaches an extreme. For now, we are within a neutral zone, so the market can really go either way here. Join us in Discord tomorrow morning for the latest observations and insights!
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