Imminent Pivot Into OpEx? April 17 Stock Market Preview
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Conditions generally persist that we’ve been discussing in recent days: Indices have reached upper Keltner resistance, the HMA is about to cross over their respective prices, and GEX indicates that major indices are sitting in the upper Dealer Cluster zone, raising odds of a pullback.
Following yesterday’s VIX monthly option expiration, today saw some divergence for VIX and VVIX most of the day, with the VIX up even as the market climbed. Despite the VIX getting crushed back to just below the opening level, keep in mind we didn’t make a lower low compared to yesterday.
Importantly (in my view), despite the red candle, the VIX closed above the daily HMA for the first time since March 30. Only time will prove whether or not this is significant, but I generally view the crossover of the VIX above the HMA as a long volatility signal. Maybe someone at the 35 strike thinks so too, based on the high volume we see (in light blue next to the chart) today.
IWM spent part of the day below the HMA, the first index to make the crossover, though IWM rebounded to close higher, just inside the upper Dealer Cluster zone. 275 is certainly possible on an overshoot to the upside.
The chart below excludes 0 DTE GEX and associated 0 DTE volume that expired today, bringing attention to the major volume at 260. While this wouldn’t close the gap just yet, 260 may be a good first look in terms of a pullback target, keeping price just above the 50 EMA. We could also drop further toward the larger GEX cluster at 250, but 260 is where we want to look for clues as to the likelihood of a continuation lower.
SPX formed a candle with a long wick to close just a few points above the opening price, not the most bullish candle if you ask me, but I view the dealer cluster zones and other data as more important in forming my view.
We can certainly see an overshoot to 7100, and we do see volume at 7000 and 7050, but overall, we’re still looking for a pullback soon (we might have to wait until after OpEx, or at least part of OpEx).
7000 is still the largest GEX cluster expiring Friday, and 7050 is close behind. Based on my math, neither of those levels are impressively different than where we closed, so tomorrow may be the kind of day where the shift in GEX as OpEx progresses may be of greater interest as participants start looking beyond Friday’s expiration. And the next OpEx cycle may not see significant positioning shifts until next week, so keep that in mind as well.
QQQ looks quite similar to SPX currently, and the GEX picture is still leaning positive, though the largest clusters are fairly close to the current price.
Volume (beyond the 0 DTE timeframe) continues to be elevated at mostly lower strikes as well, with 600 getting some attention.
QQQ’s 3D surface model reveals a GEX picture somewhat similar to SPX: Limited upside based on the largest net GEX clusters visible at this time. For me, this means watching for a potential reversal or stalling as we approach those targets, with uncertainty regarding whether or not the exact number is hit.
Given that tomorrow is Friday, and OpEx can be an interesting day, we’ll share more in Discord than usual as we follow the changes in GEX and options activity throughout the day.
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