Key Resistance Breached
Today’s gap up in indices set the stage for the S&P and the Dow to start out above their weekly Hull resistance levels we highlighted yesterday, though importantly, QQQ is holding below that level (526.37) as of today’s close. Coincidentally, 526 also represents the new Dealer Cluster zone (where we expect dealers might becme sellers) following today’s reset after Friday’s OpEx. We cover a number of key stocks and more regarding what we’re seeing with the indices in today’s YouTube video, which you can view by clicking here.
In this newsletter, we’ll mostly cover QQQ today, because we skipped over it yesterday and we spend most of the time in the video on SPX and individual tickers. Looking at the chart below, you see today’s candle and QQQ’s lower high right below the Hull. Will it gap above the line and hold tomorrow, or will NFLX (almost to 1,000 after hours!) lift the entire market for a date with the upper targets between 530-540 QQQ?
The chart below shows the daily Hull instead of the weekly, and we’re above the daily, so even if we pull back based on the weekly, we can look at 519 for possible support, and 512 below that. The momentum is still with the bulls, and it’s possible DIA and SPY/SPX are leading the way. We certainly see individual stocks that are still relatively oversold (or at least not overbought) like AAPL and even MSFT that might take the lead with any further upside. It’s also possible they’re negatively diverging as a warning signal..Let’s look at other factors for further potential clues.
QQQ gamma (GEX) moved more positive, though note that the last two highs you see on January 6 and December 24 marked nearly perfect short term tops.
For both SPX and QQQ, the GEX shift post-OpEx was mostly bullish, with upper Dealer Cluster zones shifting higher and meaningful GEX showing up at 6050 and 6100 for SPX and 526-530 for QQQ.
With VIX expiration at 8AM premarket tomorrow, we may see more volatility that Tuesday as VIX hedges unwind, and we see the VIX at a key area just below the Hull moving average, not convincingly so. 15 also represents important support in recent history, barring the brief early December dip. If the Keltners come into play, the VIX losing 15 and staying below will open up 2017-like pricing down to VIX 11 (which would shock me), and the upper Keltner is currently at 23.46.
We also happened to see big volume at 23 today, interestingly. The VIX sits at a big Dealer Cluster and we don’t see meaningful GEX below it, potentially signalling a floor for volatility.
Change is in the air. NFLX kicks off Big Tech earning season, and we have a few other notable companies reporting this week. We really start accelerating into earnings season over the next week or two. After hours moves are rarely a guarantee of how the market will act once the cash session opens the next day, but so far, futures are up again.
We have the first 20-year bond auction under the new administration tomorrow, which may be interesting since we’ve seen discussion of attempting to extend maturities for government debt, and Friday is full of important data reports in the morning between 9:45 AM and 10 AM, with PMI, Existing Home Sales, and Consumer Sentiment.
We were able to identify today’s positive shift with a 6025+ target when SPX was still down slightly thanks to GEX..We hope you’ll join us in our Discord as we look for timely setups tomorrow as well! Ultimately, our discussion of what might happen down the road is subject to change, but GEX helps us intraday to stay on the proper side most of the time.
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