Don’t Discount The Bulls Just Yet
Be sure to check out today’s YouTube video by clicking here, where we go over some key additional points regarding the indices and we note some new developments with a few individual tickers as well.
The resilience of the market as is goes on some sort of “zombie marathon” to new post-correction highs has been pretty remarkable. The wall of worry appears to be no match. Friday saw a quite cheesy close right at 6000, good job to the central planners on that one (not to specifically credit the Fed, but perhaps some other conspiratorial bad guy in your mind, real or imagined). I have to say, various fibers within my contrarian being want to see a big correction immediately, with a gap down big enough to force even Ken Griffin to take refuge under his desk (fearfully spooning in the fetal position with a shell-shocked intern), but GEX and a few simple chart indicators are telling me a different pathway appear more likely in the immediate future.
Let’s take note of a few developments as we look at the GEX Levels chart above from our website: Price is above the Hull (the yellow line) after a “suspicious” close just below the line, a close I described in Thursday’s newsletter as leaving room for upside Friday, the Keltner channels are bullishly angled upward, with room up to almost 6069, and we now see 6100 with the largest relative GEX compared to 6000 since we’ve been watching 6000. This combination of factors leads me to believe we don’t even have good odds of a modest pullback until we climb a little higher. That said, the distance to 6100 isn’t even 2%, so I’m still thinking the timing of it all could happen fairly quickly. An intraday tag of 6050-6100 and then a more meaningful reversal could easily happen within a day or two.
SPX saw total net GEX increase substantially, exceeding the reading from Wednesday’s close after a sharp decline Thursday. I mostly point this out to note that SPX GEX is in bullish territory, but the continued focus on 0 DTE and shorter dated options by the market overall leads to dramatic swings in GEX almost daily at times, so we prefer to consider a number of factors when forming conclusions about the odds of what lies ahead.
While our net GEX picture is very positive, I wanted to highlight some interesting factors to keep in mind as we look at individual GEX clusters that have noteworthy size on certain dates. Our 3D graph shows the largest individual GEX clusters, positive or negative, to be at lower prices, specifically 5905 concentrated on June 30 and 5950-5975 on June 13. If we reach 6100 in the next day or two, the potential implication is a drop of 3-4% sometime between Friday and the end of June. We also have a lot of positive GEX at higher prices, but most of it is dispersed across a variety of dates, making it impossible to look at any one date with a solid target of more than 6100. This point isn’t sort of guarantee, it’s just a note of caution as we look for additional GEX information following tomorrow’s market open.
QQQ also saw a bullish development with the upper Dealer Cluster zone shifting from 525 a few days go to 530, and now to 540, with 540 matching the upper Keltner channel as well. QQQ led us to accurate expectations last week with the tag of 533 on Thursday, a level we expected all week as we looked at the largest GEX cluster expiring Friday the 6th. 540 would be an almost 3% move, well within the realm of possibility for QQQ, even within a day.
DIA is yet another cautionary signal to not get too bearish too quickly, with a close above the Hull. Today’s QQQ saw a similar spike in GEX accompanying the rising of the upper Dealer Cluster zone.
IWM now shows more GEX at 215 and 220 than we saw earlier last week, and we are barely 3 points away from the upper Dealer Cluster zone. The Hull is curling up, but the distance above the Hull tells me that price may be a bit ahead of itself here, also possibly carrying implications for the other indices as well. Note the persistent volume we’ve seen day in and day out at various strikes between 193 and 200, with 200 once again being my “favorite” choice in the event of a quick drop
IWM saw a huge jump in GEX, the second time for GEX to reach positive territory since the GEX high May 16. IWM topped pretty close to May 16, so a strong positive reading isn’t necessarily bullish, but IWM is still quite a ways from that same level. Regardless, across the board, we’re seeing signs of expectations for higher targets to be achieved as the year progresses, even if we see a quick, sharp drop from SPX 6100/QQQ 540/IWM 215. We’ll continue updating our subscribers intraday via Discord and we’ll provide updates in the newsletter and through YouTube as well. Thanks for reading!
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