VIX: Flagging For A Spike, Or About To Break Down?
Monday’s action saw slight improvements in net GEX, though SPX and QQQ are still net negative, and the VIX shows positive GEX. Some indications point to reasonable odds of a move to 7350 for SPX in coming days, which may imply that the VIX retests last week’s high, or perhaps higher. Bears aren’t out of the woods completely, and we’ll look at important levels in both directions in tonight’s newsletter..
The VIX: GEX Shifts Higher
The VIX closed in the 18s today after briefly dipping into the 17s, quite a deflation from Friday’s spike to over 21. Does this mean the beast is done rearing its teeth, or will we see another push higher? The entire GEX picture shifted higher with Friday’s break above key resistance, and the moving averages are following, turning higher, which looks bullish for volatility. 17 and 18 are now the last largest GEX clusters on the chain instead of 15, which we saw last week. Holding above the 16.5 level generally maintains the risk of the VIX working its way higher, and the 2-hour timeframe shows a flag building that looks constructive for volatility.
Key Levels: The VIX may target 22-25 above 20, remaining below 20 risks a test of the mid-16s and potentially a breakdown back to the 15-area.
SPX Gives Mixed Signals, Risk In Both Directions
Much of what we said in yesterday’s newsletter is still in place: We haven’t yet broken above or below Friday’s candle, so risk exists in both directions. We will react to the 0 DTE GEX picture tomorrow morning in addition to the opening move, whichever seems to give us the best subjective clarity first. The upper Keltner on the daily chart is still pointing sharply higher, while the bottom Keltner points lower, creating a set of “jaws” that may accompany wider volatility in both directions. GEX remains negative, and it’s hard for me to feel too bullish until SPX retakes the large GEX cluster at 7500 on a daily closing basis.
Key Levels: Bullish over 7500 to 7565, where SPX might see resistance. Chop zone between 7400-7500, bearish toward 7350/7300 below 7400.
SPX 3D Model: Cause For Caution Into Mid-Week
Before we take a look at QQQ, note that the 3D graph shows 7345 and 7355 as the two single largest net GEX clusters expiring Wednesday, June 10th. 7375 is the largest net cluster expiring Tuesday (the 9th). This granular look at the GEX picture introduces good reason for caution, in our view, especially in view of today’s relatively weak action as the semis retested overhead resistance, initially failing that test.
QQQ: Problems Overhead, Even If We Rally
Revisiting QQQ’s weekly chart, we see the HMA is almost touching the upper Keltner channel, a set of conditions often associated with consolidation periods. We do see some room overhead though, so presumably any strength in the near-term could see QQQ retest the HMA at 735, or perhaps just above that to retest the Keltner at 743. QQQ is still in negative GEX territory though, with most of the GEX situated at strikes between 650-740.
QQQ Daily: Uncertainty Entering Tuesday
Zooming in to the daily chart, QQQ looks very similar to SPX: Widened Keltners on both sides, the HMA and 9 SMA starting to roll over, yet QQQ’s price is right in between the next overhead resistance area at 734 and our likely lower target at 700. The loss of 720 intraday may mean we retest 700 before testing 733-735, and a loss of 700 (with volume in light blue elevated today) opens the door to the 50 EMA at 684, then 680, then 660. I still personally believe this zone between 660-700 may provide some good long opportunities, depending on how the GEX picture shifts as we reach those areas.
Key Levels: Overhead resistance at 633-640, where rejection is expected, at least initially. We’ll wait for some signs of confirmation. Continuation lower targets 700, then 684.
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