Forwarned Decline Activated: Opportunity Knocks! November 5 Stock Market Preview
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We weren’t able to record our typical “daily review” tonight due to preplanned travel, but we did post a new YouTube video covering a variety of 0 DTE strategies, so check it out if you have 15 minutes or so!
We saw a gap down today that failed to rebound, which is unusual since the April lows and subsequent series of frantic ultra-micro dip buys (massive FOMO contagion?).
Let’s look at QQQ’s weekly chart to make a brief point, incorporating the weekly 20 Hull and 9 SMA:
Most of the time has been spent with price between the two moving averages, with attempts to push beyond the weekly Hull being met with mean (very mean?) reversion back to the Hull, or even back to the bottom of the 9-period SMA.
So far, today’s continued drop only touched the weekly Hull, so we have potential to continue selling down to the 600-605 QQQ zone. This also matches with the lower Dealer Cluster zone.
Zooming in slightly to the daily chart, we see price quite far below the Hull, so any further push lower may be met with a rather quick rebound toward 630.
QQQ 615 is pretty close to the middle Keltner channel, making 600-615 a reasonable area within which we might expect to see a rebound attempt.
QQQ net GEX continues a recent trend of lower highs and lower lows, a trend bulls do not want to see, at least until a contrarian GEX low is established, possibly similar to what we see with the spike down on October 10.
SPX just closed below the weekly Hull today, potentially opening the door to 6700, a big GEX area that should soon be visited by the rising 9 period SMA. 7000 remains a significant GEX cluster at the December 19 and December 31 expirations, but the odds of reaching 7000 before that appear diminished, with too much distance and too little historical backing for price to stretch that far ahead of the weekly Hull at this exact moment.
SPX’s daily chart suggests the potential to retest the 6885-6900 area, based on GEX as well as the flattening daily Hull. 6700 does appear to be a significant lower target, if any attempts to rally fail.
SPX net GEX finally declined into negative territory today, though barely. This potentially bullish divergence (less negative than QQQ or IWM) may impact other indices in coming days, if SPX doesn’t also see a sharp spike lower in net GEX.
In other words, if SPX net GEX doesn’t continue dipping deeper into negative territory, we may end up seeing a “fakeout” with the other indices, potentially driven by overzealous traders flipping to the bearish side so quickly that they capsize the SS Shortsailor (short seller? Alright, I need some sleep) and cause a squeeze back up.
Another potential red flag for eager dip buyers is the fact that the VIX closed today above the weekly 9 SMA as well as the Hull, something not seen since the spike 3 weeks ago. Holding above the 18.54 area increases the odds that the reach 20 and potentially 25-30, based on GEX as well as outsized options volume today at the 25 and 30 strikes (including all expirations at those strikes).
Despite how frustrating today’s price action was for directional traders, we at least had an accurate early picture from GEX, and we posted this in our Discord channel. We also posted extra in the General-Chat given that our live stream was postponed for the day (we’ll be back tomorrow).
We anticipate becoming dip buyers in coming days, especially if the selloff continues.
Here’s the link to our Discord server if you haven’t joined us yet! We have an active community of thoughtful and experienced traders who chime in throughout the day, and several channels dedicated to intraday and weekly trading.
You can join our discussion every day when we discuss markets in real-time via our Geeks Live livestream, now available to everyone for free via the homepage!
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If you’re interested in learning more about our strategy and approach, we address all of these topics in our Geek University course which is included in all memberships.
We posted a YouTube video today, 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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