Is A 7400 Test Incoming For SPX?
SPX breached 7450 intraday, dropping as low as 7421 before rebounding strongly to close right at the daily HMA. Semiconductors helped buoy QQQ, but QQQ still made a lower low compared to yesterday, reaching just below 701. The VIX reached 18.91, the aapproximate midpoint of the 18-20 range we discussed as a potential target. The picture across the board is still unclear regarding whether or not a short-term low is in, and some data suggests we may dip a little more before a larger bounce. Let’s look at those levels and why they might matter as we enter the last two trading days before OpEx week.
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SPX Closed Below 7500, Leaving Open Upside And DOwnside Potential
SPX closed right at the daily HMA, but nearly 18 points below the important GEX area at 7500, so we’re left guessing whether or not the next move is higher or lower. While we can’t say which direction SPX will go, we definitely perceive any move that holds for more than an hour above 7500 to lean bullish, and the longer we stay below 7485, the greater the odds of at least short-term resolution toward 7400. Today’s intraday low was a solid break of the 7450 area we’ve been highlighting, yet the tail on today’s candle may mean SPX is done with the downside. The last two drops didn’t stop until the 50 EMA was tested (the dark blue line), so I require more proof from bulls at this point.
Key Levels: Bullish above 7500 targeting 7550, 7600. Bearish below 7485 targeting 7450 again, and then 7400.
QQQ Has A Potential “Ceiling” At 715, Risk To 691
QQQ touched the large GEX area at 700 today, which is where we said we’d start to become interested in a dip buy. Lots of carnage below the surface has certainly put a lot of stocks in the discount bin, but the charts themselves are not looking very bullish, from my perspective. We also see another very large GEX cluster just overhead at 715, which could act to repel QQQ lower in opposite fashion to what we saw at 700. Overtaking 715 does begin to look more convincing that a move to 730-740 could happen shortly. We do see net negative GEX clusters down to 660, but 690-691 is the next area of interest on my chart given that the weekly 15 EMA sits at 691.40.
Key Levels: Bullish above 715 targeting 730-740, bearish below 710 targeting 700, then 690.
IWM: 285, Or 300?
Last night’s newsletter titled our IWM section alluding to a test of 290, and we basically got that today, which was a welcomed lucky opportunity. We took an intraday trade that we announced in Discord that was timely and profitable (which isn’t always the case). The intraday low of 290.68 is close enough in our book, and IWM bounced nicely from that spot, yet price action isn’t quite as convincing, so we’re open to the possibility of a move lower toward 285. Moving above 295 may target 298-300 again.
Key Levels: Bullish above 295 targeting 298, 300. Bearish below 290 targeting 280-285.
Conflicting SIgnals On Different VIX Timeframes?
The VIX fulfilled the identified setup to 18-20, though closer to the midpoint of that range. The 2-hour chart suggests we might see a pullback toward 16, but the 4-hour chart and daily chart still maintain potential for a higher spike toward 20, so we’ll see how it plays out. We view a move above 17 as more favorable to volatility bulls, with action below 17 suggestive of being “stuck” in a range of 15-16.5 for an unknown amount of time. Monthly VIX options expire the Wednesday after OpEx Friday this month, so we have some time between now and the 22nd to see moves in both directions, in theory.
Key Levels: Bullish above 17 targeting 20. Bearish below 16 with limited downside to 15.
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