IWM: Triggering A Signal Unseen Since 6/20
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We posted a brief 8-minute YouTube video today, which you can watch by clicking here. We give a synapsis of where we are with the indices as well as several major stocks, and we also go over some new channels we’ve added to Discord recently.
As we enter OpEx week, with monthly VIX expiration Wednesday premarket and monthly index options expiring Friday, we also see an interesting “achievement” by IWM as of this past Friday: The first daily close below the Hull Moving Average since June 20. Does this mean we crash? No, it also doesn’t guarantee that we immediately see a sharp pullback. But IWM was the last of the major U.S. indices to lose the Hull. I like to watch IWM for possible leading signals that pertain to other major indices based on past experience, even though IWM obviously doesn’t follow the exact pathway that we see with SPX or QQQ.
Notice the elevated volume (the light blue horizontal line in the chart above) at 212, just above the current lower Dealer Cluster zone at 210. Within the next few days, the lower Keltner channel will also rise toward the 210-212 area, atching the largest GEX cluster we see below 220. I think the implication is that we may start a larger pullback sometime between this week (preferably) or next week, with a 210-212 target before resuming a climb to a more important early Fall high. The ascending channel formed by the Keltners is bullish, so until proven otherwise, we will treat any upcoming dip as a buying opportunity.
A quick glance at the Historical GEX below shows IWM is back in negative territory as of Friday, another possible confirmation that we may be looking at weakness ahead.
SPX closed below the Hull Monday, and (surprise!) struggled to move higher, actually closing 2 points below Monday’s open.volume and GEX have been noticeable at 6000, also the lower Dealer Cluster zone, where we expect dealers may become dip buyers based on assumed behavior. Overall GEX is still very positive, with 6500 growing in recent days. Despite the positive tilt, we still don’t see much near-term concentration of the higher GEX clusters, so we have a period of possible weakness between now and the presumed resumption of the climb toward higher highs into the Fall.
SPX GEX declined in similar fashion to IWM, though SPX is still solidly positive at 1B net GEX. The trend has been somewhat lower since July 4, though.
One interesting development I noticed this past week: Negative GEX at 6050 has appeared in a meaningful way for Friday, July 18. I highlighted 6250 and 6300 on the positive side, because they are larger clusters, so we aren’t suggesting the highest probability is a drop to 6050 by Friday, but the recent appearance of the negative has my attention given other signals that point toward a pullback. I’d certainly welcome one last frightening of the bulls to initiate new longs into the next market high, let’s see if we get one.
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