Whelp..The Cat Is Definitely Dead! November 21 Stock Market Preview
You can view today’s YouTube video here. We take a look at some additional tickers like QQQ, GLD, and NVDA, which are not covered in the newsletter, so give it a look if you have a few minutes!
Our newsletter headline references yesterday’s headline, asking a question about the rebound being sustainable or a dead cat bounce. Today’s gap up above the daily Hull Moving Average at SPX 6700 looked promising, but a sharp intraday reversal not only filled the gap, but negated the positive move and more than maintained the downtrend indicated by the daily Hull.
Looking at SPX’s weekly chart, the rejection was fairly close to the Hull, a logical spot for reversal lower. We are now approaching the weekly middle Keltner channel at 6453, I’ll also note the lower keltner on the daily is near 6440, a level I mentioned in Discord earlier today (when it seemed out of reach).
Ideally for bulls, an intraday reversal tomorrow or Monday somewhere around 6450 and a close above 6500 might indicate this selloff is over. Anything short of that and we might be looking at a deeper drop.
The VIX and VVIX appeared to be giving positive signals for market bulls early today, with VVIX down 14 and the VIX down over 4, reversing dramatically to maintain the weekly Hull and closing at new post-April VIX highs, also closing above the key 25 strike on the VIX.
Today’s close above 25, unless negated at the open tomorrow, risks a trip to 30 or beyond, so keep an eye on this. Ultimately, bulls want to see the VIX lose 20 again on a closing basis.
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VVIX has previously marked short-term reversals or breakouts from sideways consolidations with a big spike and intraday reversal, leaving behind big, red candles with long wicks. This isn’t always the case, but it happens enough times to at least hope that we get it this time around as well.
Today’s reversal higher doesn’t look over, so hopefully we get a more solid signal from VVIX in the next day or two.
IWM showed slight GEX divergence, with an increase in GEX, but it’s still at a negative extreme.
Today’s close below 230 increases the risk of a trip to 220-225, which have shown higher volume in recent days.
We are still near the lower Keltner channel and IWM is within the lower Dealer Cluster zone, so a bounce could materialize soon.
Furthermore, the extreme negative GEX position likely increases the odds of at least a temporary bounce in the next day or two, so I’ll be watching for a combination of signals (includng 0 DTE GEX) to indicate a potentially attractive long entry.
We will be sure to share intraday shifts tomorrow in Discord, so we hope you’ll join us!
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