Increasing Risk Of A Pullback? November 4 Stock Market Preview
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Check out tonight’s YouTube video if you have a few minutes; we cover the broader market (including QQQ, not covered in tonight’s newsletter) as well as a variety of individual tickers!
SPX continues to diddle around this gap area from 10/27, when traders decided over that weekend that a 40% gain since April didn’t price in enough, we needed to break out from that point to begin pricing in..Well, something that hasn’t already been known for at least a few years, I guess.
Joking aside, we have 3 days of SPX closing below the Hull Moving Average on the daily chart, though the Hull is rising, and the general trend higher still favors a break toward the upside.
We do have a noteworthy conflict to the upside scenario: We just saw the 7000 GEX that we recently noted as being concentrated at the 11/21 expiration moving back toward mid-December, now overtaken by lower strikes.
Ultimately, SPX bears don’t have a shot above 6800 SPX, at least until 7000 is tagged, at which point a reassessment of the GEX picture is in order.
IWM’s Hull has already turned lower, creating a downtrend line similar to mid-September that bulls will need to overcome. 245 is now an important line-in-the-sand, with 240 as a possible ultimate target below.
Any further declines to IWM 240 may mark a nice buying opportunity, if such declines hold. 250 remains the largest net positive GEX cluster, so IWM holding above 247.46 makes 250 a much higher likelihood.
IWM still appears to be the most bearish of the three, spending multiple days below the Hull, and net Negative GEX on IWM gives us a few realistic targets in coming weeks. 235-240 appear to be good targets for November 21, according to what is seen at those strikes.
Alright, so we see some concerning signals from the indices. What about the VIX?
While the VIX shows a generally rising trend since late-October, and a higher high in November, the last 3 days have left the VIX below the trend line and below the 4-hour Hull, ultimately.
We do see room below toward VIX 15.5-16, if 17.70 isn’t recaptured.
Looking at the VIX daily chart, we see the Hull (the yellow line) starting to flatten, but not yet turning higher.
This presents an opportunity for the VIX to either drop toward the 16.1 area, or rally toward 20-25 or beyond, dragging the Hull upward with it.
Negative GEX at 16-18 potentially implies a squeeze move above 18, if the VIX can hold above that level.
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