Looking Ahead: Last OpEx Of Q2
Several large net GEX clusters suggest a possible move lower for SPX tomorrow, but 7600 is the largest net cluster expiring OpEx Thursday next week, suggesting favorable odds of a push higher to end the quarter.
SPX: Thick Resistance Overhead, But Positive Signs Into The 18th
SPX made an intraday low (slightly higher than Tuesday’s low) at 7257.33 before making an impressive rebound beyond the 7400 GEX zone. The move up was impressive, almost reaching the confluence of multiple moving averages between 7426-7465 that may prove to be important resistance. So far, the lower Dealer Cluster zone is doing its expected job of representing an area where a reversal may occur, but the “no man’s land” area containing SPX right now lends to uncertainty in both directions, with a deeper move down to 7000 still possible, just as it’s possible SPX overcomes 7465 and heads for 7576, the weekly HMA.
At this time, not much GEX exists above 7600 until you get to 8000, so the odds suggest resistance up to the 7600 area may mark another reversal area, if reached.
SPX GEX Picture Into OPEx
A quick note about the GEX picture for Friday as well as heading into OpEx Thursday next week (Friday the 19th is the Juneteenth holiday in the USA, so markets are closed). Net GEX clusters at 7300, 7320, 7345, and 7350 are the largest GEX clusters expiring tomorrow, which is concerning for bulls expecting immediate continuation higher. But have no fear, 7600 looms large as the biggest net positive cluster expiring next Thursday, so the odds favored case strictly looking at SPX’s GEX picture (which I don’t subscribe to as a singular methodology) is weakness tomorrow, then strength by next Thursday. We have monthly VIX expiration Wednesday, so there may be more than one wrench thrown in the gears as we head into a short week next week.
Key Levels: Chop zone between 7425-7465. Bullish above 7465 with 7576-7600 as the target. Bearish below 7400 targeting Friday’s GEX favorites at 7300-7350.
QQQ At A Critical Juncture
QQQ rallied right to the 720 HMA and 9 SMA resistance area, also a large GEX cluster representing the upper Dealer Cluster zone. This largest net positive cluster is where we think dealers may become net sellers, though sometimes we see GEX shift higher as well, so we will be watchful for shifts from this zone. If QQQ continues higher, resistance may appear at the weekly HMA around 735, so QQQ may be running straight into danger if the move higher continues. As usual, we have some potential scenarios in mind that are theoretical, but we will trade the 0 DTE picture presented after the cash session opens on Friday.
Key Levels: Bullish over 724 targeting 735-740, bearish below 720 targeting 680-700.
IWM Overtakes 290 Again
IWM has been the most bullish game in town, almost back to recent all-time highs and failing to achieve any meaningful downside. This is potentially bullish for the other large indices, if recent history has anything to say about the potential signal of strength from IWM. Today’s close above multiple key resistance areas brings 300 into possible focus as an OpEx target next week. I want to see any retest of 285-286 hold, maintaining gains above the HMA, 9 SMA, and 15 EMA.
Key Levels: Bullish above 290 targeting 295, then 300. Chop between 285-290. Bearish below 285 targeting 270-275.
The VIX: Saying “Not So Fast” To The Bulls
Today’s drop in volatility was encouraging for the bullish picture, but the drop brought the VIX right back to test the daily rising HMA. Just as SPX has a thick cluster of resistance points overhead, the VIX has a thick cluster of theoretical support levels below, especially in the 18-19 range. You can see I’ve selected GEX and today’s volume strictly pertaining to next Wednesday’s monthly VIX expiry, and the picture actually looks fairly similar to the total picture. This is not surprising given that VIX GEX is often heavily skewed toward the nearest expiration. The entire structure has shifted up somewhat, with GEX at 15 almost nonexistent now, but 17-18 represent the new floor (for now). The largest net negative clusters expiring next Wednesday are the 17 and 18 strikes on the negative side, 22 and 25 on the positive side. Clusters at 19, 20, and 21 show a lot of GEX on positive and negative sides, which doesn’t help us in narrowing down exactly where the VIX will close Wednesday morning, but we can at least say the odds favor the VIX not completely collapsing below 17 (or skyrocketing above 25) prior to Wednesday.
Key Levels: A spike from the 19-20 area may target 22 initially. Losing 19 may target 17-18.
One last note before I go put a few pins in my Jim Cramer voodoo doll (acupuncture, not intending harm)- the 2 hour chart for the VIX also goes along with the lower potential targets for SPX tomorrow, with the %b indicator already back to oversold at the 0.0 line, and the VIX sitting right at the 50 EMA trendline, with Keltners still pointing higher in bullish fashion. Based on the short week next week and the GEX picture for the end of the week, I am interested in long ideas on any dip tomorrow or Monday.
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