Bulls & Bears Feeling The Burn! April 29 Stock Market Preview
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Tonight’s YouTube video looks at the latest moves in SPX, the VIX, MU, AMD, and GOOGL, so 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.
Indices gapped down Tuesday, with the VIX climbing to almost reach 20, fulfilling the conviction expressed in yesterday’s newsletter that a VIX reversal was near.
Despite indices closing not far from where they opened in the cash session, the VIX was down yet again, reaching 17.82 at the close. Popular opinion is that a lower VIX is bullish, but the risk I see is that a lower VIX is closer to a reversal area, and a look at the recent past would certainly suggest the odds are favorable that we are near yet another reversal higher for the index participants love to hate.
The daily chart shows the VIX right at the rising HMA, with volume elevated at the 24 strike today.
The 2-hour chart for the VIX has pointed lower for the last 5 bars, but with the %B (20,2) already at 0.00, the odds may favor an immediate reversal for the VIX, though previous instances exist where the VIX dropped further from that %B reading, if only for a very short time.
Regardless of the VIX reaching 17 first or not, the VIX appears likely to reverse strongly off of this downside move. Market bulls will want to see the VIX fail at the 21 area to signal a likelihood of dropping to new lows.
SPX bounced right off of the 9-SMA at 7118, and the HMA is overhead at 7227.70.
A loss of the 9-SMA at 7118 or a rebound that closes above 7228 could be decisive, though the GEX picture and volume suggests 7200 could be formidable resistance, improving the odds of a short at that level (or at least consolidation).
In the event that we see more than a microscopic drop, 7000 continues to be a rational target, given the repeated daily volume at that level and the large GEX clusters on both the positive and negative sides.
Today saw a substantial decline in SPX net GEX, almost $1 billion on the dot, bringing SPX net GEX back into neutral territory. Is GEX leading the way with lower GEX since mid-April? Ask me in the next week or so.
7200 still looms large as the biggest net GEX cluster expiring Friday, leaving open the possibility of:
a market drop to 7100 or lower that is bought, reaching 7200 by Friday.
A market rally straight to 7200 before Friday, then beginning a decline to 7000 or lower.
IWM is a little ahead of SPX, losing the 9 SMA and closing below it today. Volume continues to be focused on lower strikes.
With the lower Dealer Cluster at 270, maybe IWM reverses soon enough to hit 280 by Friday? We’ll be watching reactions tomorrow as we hone in on what we think is most likely, and we invite you to join us in the conversation!
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