IWM, QQQ Diverge: April 27 Stock Market Preview
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Tonight’s YouTube video looks at the latest changes in SPX, IBIT, the VIX, and a number of scorching hot semiconductors, including AMD, NVDA, and TSM. Check it out if you have a few minutes! You can view this video and our library of previous videos by clicking Community at the top of our homepage to find our YouTube channel link.
QQQ has largely been following the highs and lows of the S&P since the 3/30 lows, but last week, QQQ made a new high every day while SPX and IWM mostly languished sideways. SPX did finally make an incremental higher high on Friday compared to the 4/17 high. Is QQQ marking the end of this rally, when the story-loving retail traders buy what the professionals are selling, or is QQQ signaling the next leg up for the entire market?
We won’t definitively answer that question tonight, but let’s see what GEX and the charts are telling us from different corners of the market.
The VIX has been printing red candles, but the VIX is also maintaining the gap-up levels that began last Monday, even briefly spiking to 22. The HMA has curled up and volume remains elevated at higher strikes, while GEX hasn’t grown at levels below 18 in any noticeable way.
All of those factors considered, the VIX seems to favor decent odds of continuing higher in coming days, even if we briefly dip toward 17-18. The upper Dealer Cluster zone at 25 seems to be a logical upside target, regardless of whether or not a broader shift ends up happening back toward the bearish side.
We want to see what happens to the VIX and to the market in the event of any VIX spike to help us in evaluating the odds of the upside move being over or not.
SPX made lower lows, but failed to make higher highs since April 17, that is, until Friday.
SPX is still extended above the upper Keltner at 7103 and below the HMA, both of which lend toward downside risk, in my view.
Conflicting signals exist, though both may play out across different timeframes:
Positive GEX up to 7500 looks bullish, with most of that GEX clustered around the June OpEx timeframe and beyond.
Volume (excluding Friday’s 0 DTE volume) in light blue was heavy at 7000, which also continues to reflect a large GEX position using gross GEX settings. The chart below reflects net GEX, so the volume makes more sense when we factor in the gross picture.
QQQ is poking above the HMA, which is also above the upper Keltner channel, so QQQ also appears to be at risk of imminent reversal.
GEX up to 680 certainly reflects decent odds of reaching those areas, but the timeframe of reaching those targets prior to a pullback is very uncertain, given the totality of factors.
SMH volume Friday has almost a linear inverse relationship to recent price action: The lower you go (down to the 400 strike), the greater the volume.
GEX is visible up to 600, but SMH just reached the upper weekly Keltner channel, and GEX on a net basis certainly makes 460 appear as a potential target.
SMH is clearly driving QQQ at this moment, but even if SMH goes straight to 600, is this pattern (from what is really a modest pullback to begin with) likely to be anything but a cycle completion that will have a nasty pullback following the new high? Parabolas from 2021 are being recalled to memory.
Unlike QQQ, IWM stil hasn’t made a new high since 4/21, struggling to get past the 280 GEX cluster and remaining stuck below the HMA. Volume Friday was almost exclusively centered around the 260-270 strikes, with 280 as the exception.
IWM may target 250 on a pullback.
If we are to see a drop before more sustainable upside, IWM may be leading the way more than QQQ, so we’ll be keeping an eye on intraday developments Monday as we seek to navigate this week’s set of opportunities.
We hope you’ll join us in Discord Monday, where we’ll share some of what we’re seeing on the GEX Dashboard in our general chat.
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