Short-Term Inflection Near? March 23 Stock Market Preview
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Starting with SPX as we look ahead toward the April OpEx cycle and the final trading week of March (plus two days of the following week), we see the accelerating selloff reached a key junction: a test of the 50-day EMA, a level not reached since May 2025.
SPX’s price is extended below the declining weekly HMA and 9 SMA, a potential contrarian signal, in my view.
A rebound from the 50 EMA would be logical, though we know that the market is not always logical, as we see it. A look back at the April-May 2025 selloff shows an immediate bounce off of the 50 EMA, but the bounce lasted barely 2 weeks before a plunge to new lows within the following 2 weeks. Will we see a similar pattern this year? I wish we could have great confidence that every corrective cycle played out similarly, but we all know we aren’t in Fantasy Land. Let’s take clues one day at a time with a recognition that a variety of scenarios could play out.
I have gross GEX selected on the weekly chart, excluding GEX and volume that pertained to Friday’s expiration. We see the continued importance of the 6000 and 7000 levels, with volume tilted toward downside strikes.
Zooming in to the daily chart, we see the lower daily Keltner channel close to 6400, also the location of the 2nd largest net GEX cluster.
Could we see a test of 6400 before a meaningful bounce? Friday saw a big bounce after hours, yet futures are lower, with VIX futures higher, certainly suggesting the possibility.
A resolution toward the upside by market open (or later) could target 6600-6700, with 6400 potentially representing a nice 50-EMA overshoot buy opportunity.
As usual, we’ll evaluate the 0 DTE GEX picture within 30 minutes of the cash session start on Monday.
QQQ closed the week below 590 for the first time since November 20, also breaking that November 20 low by 3 points.
QQQ bottomed intraday Friday a mere .30 above the weekly 50 EMA, so I think we can call that “close enough,” though the lower daily Keltner channel is still untagged at 573.66.
570 is the next largest net GEX cluster below 590, bringing the 570 strike into focus as a potential consolidation/reversal area. Notably, net GEX drops off considerably below 570, making 570 a key area in my analysis in the short term.
Net GEX plunged deeper for QQQ as of Friday’s close, yet we still haven’t seen a reading as low as we saw in early March. While we lack the contrarian extreme negative GEX reading on QQQ that might otherwise give more focus toward a short-term low point, we still may be near a reversal for other reasons listed.
IWM bottomed Friday within .33 of the 240 GEX area we’ve been highlighting, though a chance remains of dropping lower toward 230-235.
Given the confluence of the lower daily Keltner at 239.50, and the weekly 50 EMA at 240.02, I like the odds of a bounce from somewhere in the 235-240 vicinity. With credit given to the initial 0 DTE GEX picture tomorrow morning, I generally like the idea of buying any gap down that might occur Monday, so we’ll see how events unfold tomorrow.
Note that volume Friday was elevated at the 230 strike as well as 240, so GEX and volume has still remained focused on lower levels, for the most part.
IWM historical GEX shows a net GEX close Friday very close to the GEX low on March 13, the previous Friday, which is almost in extreme territory. We saw a bounce after the last low reading, will this be different?
Lastly, the VIX is still holding bullish levels for volatility, also maintaining a positive GEX picture with the largest net clusters at 25, 30, and 35. Relatively elevated volume is visible up to 55.
The VIX holding above 25 on a dialy close maintains the most bullish picture for volatility (likely a bearish picture for indices), with a break below targeting the 20-21 area appearing to put the bullish VI picture in jeopardy.
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