Participants bought the gap down this morning, at least enough to get indices back to virtually unchanged for the day. What does GEX say about the durability of a rebound from here?

Today started out according to my desired script: Gap down after VIX expiration, weakness turning into a sizable recovery, and then we saw the bond auction coincide with a stronger drop to the mid 5850s SPX. IWM almost reached 200 in one day. Let’s take a look at what might be ahead based on the charts and GEX.

We’re starting to see more obvious negative divergences, just as indices closed below the daily Hull moving average for the first time since May 9 (in the case of SPX). With VIX expiration tomorrow morning, we can’t rule out another push higher, especially with a retest of the Hull now coming very close to the upside targets we’ve been watching for quite some time.

GEX has settled down a bit post-OpEx, with IWM posting the largest drop, back into negative territory. From all appearances, indices are very close to a more meaningful pullback, and an overnight futures high and reversal would not be surprising, if not around the open tomorrow. Despite the near-term concerns, we believe higher prices are likely beyond this upcoming drop.

Markets stayed elevated for OpEx week, only spilling off after hours Friday on news of a US debt downgrade. With VIX monthly expiration Wednesday, let’s take a look at what GEX is saying about some of the possibilities this week.

Divergences are starting to emerge as indices attempted to push even higher today. SPX still has 6000 to contend with overhead, while IWM and even QQQ appear to be closer to a top. Do we still see a downside move ahead?

IWM has already shown early signs of weakness, closing lower than any day since the big gap up three days ago, and showing a fairly sharp drop in total net GEX over the last two days. SPX and QQQ are hanging on for now, but with the upper Keltner channels nearby and a lack of GEX increasing at higher strikes, we could see a pullback at any moment, with a quick tag 1-2% higher still being possible.

The bull train shows no signs of slowing down as we make a straight shot toward the upper Dealer Cluster zones across the board. We do see some warning signs in paradise, including a VIX/VVIX divergence, and we’re near or at the upper Keltner channels. What likely happens next?

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Markets showed amazing strength today, maintaining most of the gap up this morning as indices entered their upper Dealer Cluster zones. These zones can shift, and they each have some “wiggle room” within, but the markets decision to tackle these upside targets first now has us on watch for a constructive pullback in the near-term.

With the announcement of a trade deal with China today, futures have gapped up above the Hull moving average. We’ve been noting the uncertain picture painted by conflicting signals, though eventually we believed GEX signaled attempts toward 5800-6000 SPX. If the gap up holds, we may head straight for those higher targets, postponing another meaningful pullback until those targets are reached.

We saw indices test the Hull moving average from below today, an event we were hoping to see today or tomorrow. This test of support-turned-resistance saw rejection in most cases, though we need to look more deeply in tonight’s newsletter at some mixed signals that aren’t necessarily agreeing as to the next most likely step.

FOMC day was action-packed with frequent moves in both directions throughout the day, but not a lot of net movement occurred. We continue to see a mixed picture, so participants haven’t shown their hands in a way that gives us high conviction in one direction. What clues might tilt the odds either up or down?

Indices finally gapped down and closed below the Hull moving average for the first time since April 21, when the second leg of this rebound started April 22nd. Unlike April 21st, when we declined 4 days to reach the close below the Hull, we are at the beginning of the downside this time…Will the beginning also be the end, with another overtaking of the Hull tomorrow, or will we see another 5-10% pullback? Let’s see what GEX says.

The 9-day win streak couldn’t make it to 10, with indices rally from the open but still closing below Friday’s close. This also brought most indices right to the Hull moving average alongside a sharp reduction in positive GEX, or an increase in negative GEX for IWM. Are we teetering on the edge of the next drop, or resuming the climb tomorrow?

The VIX may be giving an early preview to a likely pullback coming soon, but SPX has noteworthy GEX at 6000 that indicates continuation higher is likely after the next pullback. What else can we tell by looking at the current GEX picture?

Indices are in the upper dealer cluster zones, and the VIX seems to be finding a floor. Will this consolidation resolve higher, or was today’s intraday fade a sign of a near-term trend change?

The noted bullish tilt for SPX’s GEX appears to have had an impact, with the top end of our anticipated pullback range being hit and quickly rocketing toward the 5600 level mention several weeks ago as an upside target. We’ve filled the gap from April 2nd, so what’s next?

SPX continues showing a relatively new large GEX cluster at 6000. We have some conflicting signals in the short term, so whether or not we see a pullback now versus later becomes an important question. Let’s take a look at the data.

Indices posted an indecision candle today, though the declining weekly 9-period SMA allowed a close above that important level…For now. We see a positive divergence with IWM, yet the VIX regained the 4-hour Hull moving average and almost captured the daily Hull as well. Is a larger pullback near?