Pivotal Resistance Pre-CPI
Yesterday’s gap down was bought, and today’s gap up was sold, so a game of Opposite Day is being played this week (so far). Well, except for our friend the Dow Jones (DIA), which closed near highs of the day and above the Hull moving average, which may signal additional upside in the near future. SPX and QQQ did not paint such a pretty picture, failing to hold above the Hull and closing well below the line. CPI and a ton of major bank earnings in the morning can easily contribute toward a bullish or bearish outcome, so traders without a position may be better off reacting to any opportunities created by the initial moves in the morning.
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Looking at SPX’s chart above, the downtrend is still intact, with SPX’s price failing at the Hull despite painting a higher low. And yet we’re close to the lower Keltner channel, an area from which we could see a reversal, so we can identify bullish and bearish factors on the chart (not helpful for a prediction with strong conviction).
The GEX Levels chart looks somewhat more encouraging for bulls, perhaps, with price bouncing out of the lower G2 Dealer Cluster zone and total volume appearing relatively elevated at the 5900 area. 6000 also received some attention, and both levels have noteworthy net positive gamma (GEX). A continued bounce may target anywhere from the zero GEX level at 5925 up to the 6000 level, and we will look for intraday GEX positioning on a 0 DTE basis to firm up likely targets during trading hours. But first, the Hull at 5863 needs to be overtaken.
DIA , which we’ve highlighted as a potential contrarian play, is performing better than the other major indices and closed near highs of the day, also closing above the Hull. The Keltners do not look encouraging in terms of a major trend change, with upper and lower channels aiming to the lower right, but as long as 422 holds, we can look at possible overhead targets for at least a short term rebound.
GEX is back to positive territory for DIA, an outlier, and we don’t see meaningful interest in lower strikes. 435 and 440 appear to be major clusters to the upside, though.
DIA is climbing out of the green G2 Dealer Cluster, and while 440 GEX seems to mostly be concentrated around February 21 at the moment, 435 GEX is concentrated on this Friday, January 17, so I am paying close attention to this level in particular, given the shorter timeframe to expiration for a major GEX cluster.
I know we posted the earnings calendar yesterday, but as a reminder, many of the big banks report in the morning, likely somewhat overlapping with CPI at 8:30AM ET. Prepare for volatility, and have an idea in mind of where you may buy or sell the tickers you’re trading!
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