IGV: Approaching A Low? February 25 Stock Market Preview
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Tonight’s YouTube video discusses SPX, QQQ, the VIX, and NVDA, so check it out by clicking Community at the top of our homepage to find the link to our YouTube channel!
We’ll discuss SPX and more later, but let’s start out with a quick look at IGV, which is an ETF focused on the software subsector. Looking back to 2024, you can see it’s been on quite the rollercoaster, and we’re within the zone that has marked major lows over that timeframe. The lower Dealer Cluster zone is not far below at 70.
To give credit where it’s due, @cyclesfan on x.com pointed out that volume on February 4 was the largest in IGV’s history, followed by the 2nd highest volume on the 5th (the low before a multi-day rebound), and yesterday and today saw the 3rd and 4th highest volume readings.
Such high volume at this major area could indicate a rebound is near, or at least signal how meaningful (and perhaps unlikely, at least before we see another bounce) a new breakdown would be from this area.
One reason I’m interested in IGV is because it has sometimes led declines in QQQ with divergent weakness several days or more in advance, and the volatility of the sector makes it an interesting trading vehicle for me personally.
I also find the GEX divergence of interest: Note that the February 4 highest volume also coincided with the net GEX pivot, with GEX climbing significantly thereafter. Even with price making a new low recently, GEX is still positive, and much higher than the negative reading February 4 and earlier.
The combination of positive GEX diverging with price action and the longer term support in this area makes for a potentially interesting speculative long trade in anticipation of a near-term bounce.
With NVDA earnings tomorrow, we may have another “excuse” for a move higher Thursday/Friday, so let’s keep an eye on further developments Wednesday.
QQQ net GEX is fairly close to neutral after seeing an improvement into today’s cash session close, but you can see the net GEX clusters at negative strikes from 600 downward are still significant, making strikes down to 580 targets with reasonable odds within the expected range painted by GEX.
As pointed out in the YouTube video, which focuses more on gross GEX instead of net, we have a lot of GEX concentrated between 600-620, so we could simply (or not so simply) trade between 600-620 for awhile. The HMA and 9 SMA are turning more neutral, and QQQ closed above both of those, so we could see continuation toward 615-620.
A break and a close below 600 likely raises the odds of revisiting the 590 area or even lower. We’ve been a broken record on that point, so we won’t add any additional fractures to the record.
The most interesting SPX indicator levels in my opinion are on the weekly chart at this moment, revealing another week where SPX is (so far) holding tests of the 15 EMA.
SPX still rejected the 9 SMA at 6910 and SPX hasn’t retested the weekly HMA at 6944, so a retest could be in the works.
Overcoming and closing above 6944 certainly looks better for the bulls, but the HMA has turned over, painting a picture of possible weakness going forward. We want to see if SPX can retake 6944 and close above it on a weekly close to change this picture. SPX net GEX is slightly positive now, but one day does not make a trend.
The VIX is still higher than last week’s close, and we could see a decline towards 18 and still maintain above the HMA and 9 SMA. Holding above those lines keeps the trend higher for the VIX, in my view, and we still see the VIX in a positive net GEX environment, with 25 as a potential target.
Until the VIX can break and hold below 17.5 on a weekly basis, bounces to the upside for stocks may be short-lived, so we want to watch major indices in conjunction with the VIX to try and consider a more complete picture of what’s happening.
With NVDA reporting earnings tomorrow, we can’t properly account for the event risk that comes with the territory, and this raises uncertainties regarding the broader indices as well.
On the surface, and with the earnings caveat in mind, NVDA does lean positive in my view, with a positive net GEX picture and a large cluster at 200 that may be a magnet if price holds above the key moving averages like it has been.
The lower Keltner channel is approaching 170, which is the lower Dealer Cluster zone, so that confluence may be interesting if the stock sells off.
Net positive GEX at 210 is not as prominent as what we see at 200, but 210 matches the upper Keltner channel. Volume today was mostly at higher strikes up to 220, though it’s impossible to say whether the action today has anything to do with earnings after the bell.
My preference is to react to moves that occur surrounding earnings as opposed to anticipating moves, so we’ll be watching NVDA after hours tomorrow, for sure.
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