Tuesday CPI: Pre-OpEx Tree Shake?
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Tonight’s YouTube video can be viewed by clicking here. It’s a short video where we cover a number of different tickers (including AMD, META, and NFLX) as well as some different perspectives on the major indices.
Let’s begin tonight’s newsletter with the VIX, particularly on a weekly timeframe. We’re entering the 3rd week (so far) of the VIX holding the weekly Hull Moving Average, which shows a trend change over the same timeframe.
The 9-period SMA at 17.12 is very close to the daily Hull at 17.32, which might signal an important bull/bear line for the VIX.
Volume continues to be almost exclusively at the 15 strike and above, signaling very little interest amongst market participants in lower VIX levels. If the VIX isn’t like to go down, then it’s likely to go sideways or…don’t you say it!
All jokes aside, the 2-hour chart shows 18-18.50 as a possible target, with the VIX holding above key “support” and the Hull curling upward.
Combining our 2-hour view with the weekly view, we can conclude that using these indicators reflects an important zone between 17-18.5 that volatility bulls will want to see overcome on a daily close to signal the potential for the 25 and 35 strikes that have seen repeated volume day after day recently.
Let’s shift focus to IWM’s weekly chart, showing relative weakness as far as the distance from the Hull and the proximity to the 9 SMA, though the upper Dealer Cluster zone represents the largest percentage increase compared to QQQ and SPX/SPY.
Volume continues to be elevated at the 210 strike, and 210 represents the largest net GEX cluster next to 215, which has increased lately.
My conclusion relative to IWM is that a break below 219 will likely reach 215 (and possibly 210) before a big rebound is possible, or a break of 225 to the upside will target 230.
Given the distance from the Hull, I do carry a speculative view that a test of 225 is likely.
QQQ has been struggling to maintain the slowly turning weekly Hull, though this week (though very early) gives some hope to bears with continued rejection of the line, the 3rd week since April.
580 is a significant GEX cluster and represents a fairly small increase from here, so a test of that level should not come as a surprise, especially during OpEx week.
That said, the current bias (as defined by following the rule of short below the Hull, long above) is short, with a test of the 9-SMA at 557 the next lower target.
With CPI pre-market at 8:30AM ET, we’ll be evaluating QQQ, the VIX, and IWM for any ensuing volatility to determine whether or not a definitive direction appears to have been chosen. We hope you’ll join us in Discord tomorrow where we’ll share some early observations!
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