SPX: Bullish Into June OpEx?

Note- this newsletter was written well before futures gapped up Sunday evening, but I stand by my expressed opinions, and so far, action seems to be validating the targets described.

Indices closed above important resistance Friday as their respective GEX pictures surged into positive territory. GEX looks bullish into the last OpEx of Q2, but with the VIX oversold heading into monthly VIX option expiration Wednesday, we may see 1-2 days of tree shaking, whether in the first half or second half of the week ending Thursday.

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SPX Targeting 7500 (Again)

Late last week, we saw SPX’s GEX picture battling between 7500 and 7600 as the largest GEX clusters concentrated on the June 18 expiration, though as of Friday’s close, 6500 seems to have won out, though now that GEX is concentrated on Monday instead of Thursday. 7350 and 7450 are now closely competing for the largest clusters expiring Thursday. We may see further shifts in the GEX picture as we start the cash session Monday, which we’ll include in our Discord gamma exposure channel updates at that time.

SPX Closed Above 7400, HMA

SPX’s daily Keltners appears positioned for more volatility ahead, with the upper and lower channels creating a wide “jaws” pattern. Friday’s close appears constructive, with SPX closing above the HMA at 7394 and the large GEX area at 7400. While Monday’s GEX picture indicates 7500 as an important potential target and resistance area, we’ll also keep in mind the potential to reach a bit higher by Thursday, potentially toward the weekly HMA at 7580 or the last large cluster at 7600. I say “last” because 8000 is 400 points away, and thus not in our consideration of immediate areas that SPX will have to deal with before turning our attention higher. On the negative side, the HMA is still declining and SPX has not overcome the downtrend by a significant margin as of yet.

Key Levels: Bullish above 7400 targeting 7500, then 7580. Bearish below 7400 targeting 7350-7355, the weekly 9 SMA and a large GEX area.

QQQ: Targeting 736-740 Initially

QQQ’s weekly picture continues to show potential for QQQ to retest the weekly HMA at 736, which was previous support for 2 months prior to 2 weeks ago. At the point of reaching 736, QQQ might as well create a little more pain for da bears with a push toward 740, the last large net positive GEX cluster. The upper Keltner is at 752, and we do see GEX at 750, but I think the odds likely favor consolidation before we hit 750, subject to future changes in the GEX picture, of course. The big GEX area at 700 continues to be an important downside target and bull/bear line, in our view. Friday’s option volume across all expirations beyond 0 DTE was elevated at 700, 720, and 740.

Key levels: Bullish above 720 targeting 736-740. Bearish below 720 to 700. Below 700, tighten your safety harness.

IWM: Leading The Way Higher

IWM not only recaptured the HMA first, but it continued higher from there on Friday, achieving the greatest progress above key moving averages relative to SPX and QQQ. The GEX picture shifted higher as well, despite option volume favoring the 260 and 270 strikes as of Friday. The daily and weekly charts both seem to support a move to 310, and GEX is present there as well, but the daily chart may need a little time for the HMA to catch up before pushing that high. In the interim, 300 looks like a solid and likely target this week, as long as any retracement holds the 286-287 area.

IWM’s Positive Net GEX May Be A Contrarian Signal

One factor to be aware of with IWM- the last 2 times we saw positive readings on IWM (May 26, 28-29), we saw short-term tops, to the day. May 27 was lower, then IWM rebounded into the 29th, then the 30th was a gap down. We saw a choppy multi-day pullback after that.

Key Levels: Bullish above 290 (max downside 286-287) with 295, 300 as targets. Bearish below 286 targeting 280.

The VIX: Bullish For Markets, But 20 Retest Possible

The VIX broke below the daily HMA and decisively broke the 19 strike, bringing the VIX down to the 17s. This move coincides with indices looking more bullish. Some caution is warranted here as we see GEX primarily concentrated at the 17-20 strikes heading into Wednesday’s premarket VIX option expiration. The 9 SMA on the weekly is at 17.64, and the HMA is at 15.72, which could serve as a brief spike low target that I wouldn’t expect to last, beyond marking a short-term VIX low. Holding 17 is more likely in my view, with a possible retest of 19-20. It remains to be seen whether indices will begin the week showing strength or weakness, but combined with SPX GEX data, it appears strength could be front-loaded this week for SPX.

The VIX 2-hour chart supports the GEX picture in terms of 17 likely representing a bottoming zone, subject to any shift in GEX we see tomorrow/Tuesday. The %b indicator at the bottom of the next chart shows the VIX to be in oversold territory, with a simple comparison to visible prior readings demonstrating that the VIX typically moves up (either a little or a lot) following 1-4 bars after similar readings.

Key Levels: Bearish for volatility below 17, targeting 15.70s. Chop zone between 17-20, with a move beyond 20 potentially targeting the upper Dealer Cluster zone at 25.

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