SPX Stuck Below Resistance: February 5 Stock Market Preview
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SPX approached one of the indicators we’ve focused on recently: The weekly 15 EMA, currently at 6831. Today’s low was roughly 11 points higher, bouncing back to close under the weekly 9 SMA.
The close below the weekly 9 SMA and the HMA is still a concern, though we technically have covered enough ground on the downside to potentially see a larger rebound. But let’s look at more data before drawing any conclusions.
6800 is currently the largest net GEX cluster, with 6900 right behind it. Given that 6900 is now overhead resistance, we need to watch what happens on any retest of that level.
On the daily chart, SPX is also below the HMA and 9-SMA, so any retest attempt that makes it past 6900 will need to contend with 6946-6957, which I consider strong resistance now.
The large GEX at 7000 can be viewed as a potential ceiling until it’s overtaken, and as I’ve suggested before, perhaps indices need to have a sufficient enough drop to cause a large shift in the overall GEX structure (or perhaps “accompany” a shift, as to not assign particular causation).
A shift in the GEX structure that accompanies a negative move in price could help open a pathway to higher targets later, to put a positive contrarian spin on the aftermath of wherever this drop concludes.
SPX GEX moved deeper into negative territory as of today’s close, yet SPX net GEX is not yet in extreme negative territory when compared to previous closes over the last 12 months (we have a comparison tool that shows us this information).
To see a potential contrarian rebound, we would want to see net GEX in extreme negative territory. If not at an extreme, we would prefer to see a notable positive move in GEX into the close, potentially divergent with a lower price on SPX. Either of these conditions would increase our confidence that a low might be near.
The VIXC made a higher high today, reaching 21.22. This is the highest close since November. GEX is now positive overall on the VIX as well. The upper Keltner channel is rising sharply, appearing to paint the way to the positive GEX cluster we see at the 25 strike.
As long as the series of higher lows and higher highs persists, and any backtest by the VIX holds the 17 area, the trend is UP for the VIX.
Bad news for market bulls- We see the 9-SMA and HMA turning higher on the weekly chart. While not an exhaustive comparison, I used our new drawing tools to circle 2 years worth of instances where we saw both of those moving averages turn up on the weekly chart, and you can see the VIX increased for multiple weeks beyond that point in every case. Will this time be the same or different?
We’ll take a look at the 0 DTE picture in the morning and share our observations in Discord, so we hope you’ll join us!
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