The flip-flop continues, this time with QQQ ending the day red while IWM was green. They shared one commonality today: Lower highs and lower lows compared to yesterday. QQQ also entered negative GEX territory for the first time in quite awhile. Let’s take a closer look at the current picture.

IWM is negatively diverging from the S&P and Nasdaq again, possibly forewarning of a quick pullback before resuming more upside. The strong upward momentum makes any bet on downside seemingly risky, but the setup is present for some downside. If IWM sees more downside, will SPX and QQQ follow? Let’s take a look at the GEX picture.

As we begin a new OpEx cycle into the August OpEx, we look at the current GEX setup and technical levels as well for the indices and the VIX. SPX in particular shows interesting intersectionality with its weekly versus daily pictures.

We’re approaching the end of OpEx week in July, and markets seem resilient, ignoring potential risks in favor of making new highs. The VIX has not made a new low despite the rally, and we very well could end up seeing a short-term top imminently as indices reach potential objectives. The GEX picture is still positive, yet GEX across the board is well off of its 4th of July fireworks highs. What’s next?

Typical choppy OpEx price action continues, even as we completed the monthly VIX options expiration this morning. We have enough room overhead to see a nice rally into the Hull Moving Average again, yet the VIX is also still holding the rising Hull, a conflicting picture. What does GEX say as we approach the back half of OpEx week?

IWM seems to have validated the beginning of a pullback, and the VIX Hull is curling upward. What lies ahead? Let’s take a look at what GEX+charts indicate as the most likely path forward, in our opinion.

Markets rebounded slightly after a gap down open, continuing the overall sideways consolidation we’ve seen over the last few days. We do believe we are nearing a decision point for indices, with a break higher or lower becoming more likely. Will this occur before VIX expiration or before OpEx, or beyond this week? With CPI premarket tomorrow, and PPI Wednesday, we have plenty of opportunities for volatility ahead.

We finally see IWM closing below the Hull, an “accomplishment” not seen since June 20. IWM was the last index that lacked a daily close below the Hull, and GEX has also shifted more negative across the board. SPX saw virtually no change for the entire week, following SPX and QQQ already closing below the Hull. With VIX expiration Wednesday and monthly OpEx Friday, risk in both directions exists, but we may see a more interesting week than we’ve seen in recent past, so let’s take a closer look.

Indices continue a slight game of musical chairs, with SPX technically printing a new high today (by 6 points over the July 3 high) while QQQ printed a lower high and a lower low compared to yesterday. IWM finally hit 225 as well, exceeding the target to reach 226 before fading back below the upper Keltner. We continue to look for a near-term pullback, and signs are mounting that it may be close.

Our recognition of a possible attempt back up by indices proved correct today, with the VIX has quickly plunged toward an extreme lower target, almost reaching the 4-hour Keltner bottom at 15.76 before rebounding back to almost 16. With indices stretching even higher toward their respective upper Dealer Cluster zones and beyond the upper limit of the Keltner channels, we are likely still on the doorstep of a larger pullback.

QQQ and SPX remain below the Hull Moving Average, though IWM closed above the Hull today, and the VIX looks like it could go either way..So we are at a point of uncertainty. We also have positive GEX increasing modestly across the board, lending credit to the idea that we may see some choppy ups and downs before a more significant pullback.

We finally saw a break below the daily Hull Moving Average today, complete with a sharp drop in positive GEX across the board. Odds are increasingly shifting toward the beginning of a pullback, though we will entertain scenarios that may involve further upside attempts before any meaningful downside. Let’s take a look at the big picture, including the VIX.

SPX completed the traditionally bullish week of July 4 with a solid rally right into Thursday’s half-day close. Our headline concern on Thursday evening regarding VIX divergences was quickly met with a noticeable VIX spike on Friday while cash markets were closed, and futures continue to fade. While recognizing the inevitable future pullback that we expect to occur in context of a vertical blow-off, we need to exercise patience and discipline as well. Tops and bottoms are not easy, just ask Tulip bulb investor Isaac Newton.

The VIX low was actually June 27, despite the market continuing to rise this week, fulfilling the normal bullish lean of the July 4 trading week. With this negative VIX divergence (admittedly still a small divergence), and VIX:VVIX negatively correlated today, we may be approaching a more likely period of weakness in coming days beyond July 4. Let’s take a look at possible final upside targets and where a drop might land.

In picture-perfect fashion, we saw major indices struggling today, except for beloved IWM, which rocketed right into the 220 level we’ve discussed for a couple of days as the last target that looked likely for major indices. A bullish overall GEX picture remains, but let’s take a look at what that means as we consider both timeframe and potential pathways to bullish continuation.

Is the ship listing far enough to one side yet to see a reversal? Trend changes are rarely neat and perfectly logical, so let’s take a look at a possible overshoot scenario as well as other shifts in GEX today.

Monday marks the end of Q2, and an interesting possible inflection point for markets, with GEX pointing higher ultimately, but a shorter term pullback becoming more likely as divergences build. Will normal July 4 bullish seasonality play out as many expect?

We see some smaller early divergences with the VIX and the indices today, and we are in the upper Dealer Cluster zone for IWM, but the upper zones for QQQ and SPX have moved higher as price moves higher. We still have the upper Keltner channel to contend with and possible surprises inherent with tomorrow’s final Q2 weekly expiration and the end of the quarter Monday.

SPX is within the upper Dealer Cluster zone and the upper Keltner channel is roughly 1% away at 6155. With the end of the quarter right around the corner, the pathway over the next few days may be treacherous, with volatility in both directions. Our conclusion remains that the easy money has been made since April, and the pathway may be more difficult looking ahead, despite an ultimate upward trajectory looking good into the Fall.

Indices made a decisive move today, gapping up even more from the Hull Moving Average and propelling markets to their upper Dealer Cluster zones. SPX finally reached 6100. Let’s look ahead and see how far this move may extend, and what the VIX has to say about that as well.