Post-FOMC Uncertainty: Mixed Signals? April 30 Stock Market Preview
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Markets are at a crossroads after consolidating this week. Signals are mixed as bulls and bears battle over what’s next: A move up to SPX 7200, or a move down to 7000?
The VIX seems to suggest that even if volatility does get crushed further, the downside is likely limited, with almost no GEX or option volume taking place below the 17 area. Most volume was actually between 20 and 30, and the VIX maintains above the HMA at this moment. All things considered, my opinion is that either the VIX begins a move toward 20, and then potentially 25, or we dip to 17 and likely see a reversal back up from that point.
IWM is now looking like the most bearish of the indices in the very short term, which likely means SPX and QQQ won’t be far behind in catching down. This also backs the idea that another VIX spike is likely.
That said, we can’t rule out a spike to 280 before a move down toward 250-260, and the GEX area at 270 held today (so far).
Volume at lower strikes continues to be a concern, though not a precise indication of a drop in a particular timeframe.
As it stands now, IWM moving lower toward 260 is likely a dip to buy, with 280 as the upside target from there. We’re left with the same set of contrasting possibilities that we deem the most likely: reacting to a move into the upper Dealer Cluster zone at 280, or reacting to a move deeper into the lower Dealer Cluster zone closer to 260, with the VIX likely moving in opposite fashion.
IWM net GEX plunged deep into net negative territory, and in fact, you’ll notice GEX began weakening in advance of the move lower, which is why we like to pay attention to the changes in net GEX.
IWM is not anywhere near a comparative extreme with today’s reading at the close, so we could see GEX fall further before a stronger contrarian buy signal appears.
IWM is at odds with SPX and QQQ in showing such a negative reading, which may have significance if IWM is leading the others down at this point.
SPX has mostly just moved sideways, barely breaching the 9 SMA before recovering back above it by the close.
The charts in the newsletter tonight all exclude 0 DTE GEX and volume, so we’re looking at activity and GEX that is geared toward tomorrow and beyond.
We see heavy volume at 6900, 7000, and 7150, and GEX continues to be skewed higher,
The HMA is curling over to the downside, and price is beneath the HMA, but the distance between the two introduces uncertainty as to whether SPX rises to tag 7200 and then drop, or possibly drops to test 7000 and then heads toward 7200.
QQQ can thank the semiconductors for the most bullish-looking chart, though given how overbought the semis are, I wouldn’t be surprised to be surprised by a drop (sounds like something the baseball player and philosopher Yogi Berra would say).
If QQQ ends up rallying further, I’d look for a possible reversal anywhere between 670-680, with a target of 630, potentially.
SPX continues to show 7200 as the largest GEX cluster expiring Friday, so we might see some whipsaw action between now and then. We invite you to join us in our discussion in Discord tomorrow.
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