Approaching A Likely Market Turn
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I’ll start the newsletter with our customary link to our YouTube video, where we discuss some different ideas about the broader indices as well as some individual tickers not covered in the newsletter, which you can view by clicking here.
We actually saw some interesting action today (at least as far as a normal OpEx week is concerned), so I wanted to focus on some of the more interesting developments today. QQQ has entered the upper Dealer Cluster zone, leaving a fairly nasty wick from the intraday highs despite the overall positive day. A few of us in our 0 DTE channel in Discord captured some nice intraday profits from the move off of the highs. Despite the rejection, and the struggle at the upper Keltner channel, we may have just enough “umph” to see another move toward the QQQ 525 level.
Today’s closing total GEX for QQQ decreased, though we are still in positive territory. While this particular divergence with SPX and other major indices is a negative, QQQ still shows 525 as the largest GEX cluster expiring tomorrow, so I think the odds are quite good for yet another push higher above today’s intraday high of just under 522. We are getting very close though, and GEX is not growing at higher strikes, so we are on watch for a pullback in the short run.
DIA has been underperforming all week, printing lower lows and lower highs even as of today’s close. Despite the price action, the chart appears to look constructive, with the downside this week looking more like consolidation than anything. DIA does have the same problem as QQQ: A lack of substantial GEX growing above the 427 level in this case.
That being said, the highest GEX cluster for tomorrow’s expiration is 425, and 427 also has substantial representation.
DIA also saw a major jump in positive GEX, likely due to the increase at the 426 and 427 strikes. With today’s close over 424, and DIA not having reached the upper Dealer Cluster zone yet, I would say DIA adds another data point in favor of indices making one last short-term push tomorrow alongside QQQ toward 525 and SPX toward 6000 (discussed in YouTube).
Lastly, the VIX broke below the Hull Monday, triggering a short volatility signal, and today an attempt to push back above the Hull at 18.81 was rejected. But we do see volume at higher strikes, particularly 25 and 30, as well as several strikes between 40-50. With the VIX showing a lot of GEX between 16-18, downside may be limited for volatility going forward.
Despite the noted perception of limited downside, we do see the 4-hour VIX Keltner channels pointing toward a possible visit to the 17 area for the VIX. This also supports the idea of the markets rallying yet again tomorrow, even if they ultimately fail to reach the exact targets mentioned. Understanding GEX and what makes GEX, it’s not surprising to see targets missed (even barely) or sometimes briefly exceeded, so tomorrow we will be on high alert and focused on hedging downside risk more than initiating new long positions beyond an intraday timeframe. Thanks for joining us in Discord and thanks for reading!
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