Heading Straight To Target
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Well, IWM didn’t get much love today, but SPX (SPY) and QQQ keep rocketing toward upside targets, leaving behind more gaps than I’d have between my teeth after a fight with Conor McGregor (theoretically speaking).
We do see some concerning divergences in the short term despite overall constructive shifts in GEX post-OpEx, some of which we discuss in our YouTube video posted this afternoon (you can watch it by clicking here). We also cover QQQ, MSFT, MARA, IYR, the VIX, and more, but in the newsletter today, we’ll primarily discuss IWM, BTC, VIX, and VVIX.
We’ll briefly touch on SPX, which you can see is right at the doorstep of the upper Keltner channel at 6119. We flirted with 6100 today but rejected from that level. The Keltners don’t look bullish either, but with GEX improving, perhaps the next pullback (which appears fairly imminent to me) will be another buying opportunity. We have the middle Keltner and the rapidly rising Hull below at 5951-5952, and the next target below that would be close to 5800.
Looking at the GEX levels below, you can see SPX is now in an upper Dealer Cluster zone, where we think dealers may become sellers, though this box has shifted up and extends nearly to 6200. We’ll be watching to see how any further incursion into the box handles the 6119 area.
We’ve mentioned the VIX/VVIX divergence a few times, where the VIX and VVIX move in opposite directions (defined by the daily candle) and several occurrences close together can be an indication of a VIX spike in the future. We had one such occurrence 3 days ago, and several instances of the VIX and VVIX rising in the face of a rising market. Not enough to confidently say a spike is coming, but this behavior coincides with indices approaching upper resistance, so the ingredients are coming together for a possible volatility rebound.
You see VVIX (the index measuring future expected volatility of the VIX) above and the VIX below for comparison. Note that both have regained their Hull moving averages on the 4-hour chart, which is a potential long volatility signal.
IWM was the odd man out today, down while the other major indices were up. The Keltners are still in a downtrend despite its price rising since the mid-January low, but we haven’t quite tagged that top channel yet, currently around 234.
GEX has improved dramatically from the lows, but it’s still negative, though not deeply negative. We consider -114M to be neutral.
IWM’s GEX Levels chart shows price to be consolidating just below the upper Dealer Cluster, which starts at 230 and reaches 233, very close to the Keltner channel we just mentioned. Does IWM have one more spike to 230 or even up to 235? We see GEX up to that area, so it’s entirely possible. Such a move appears to be a selling opportunity, as long as the GEX and chart pictures remain similar to the current view.
Lastly, BTC is consolidating just below 105k, and we have volume and GEX at 110 that seem to be calling for a visit.
I glanced at our 3D graph, and I’ll note that currently 105k is the largest GEX cluster scheduled for Friday’s expiry, with 110k mostly centered around 1/31. I interpret this to mean the timing of such a target is uncertain, but we could see an attempt toward that 110k as soon as this week, though perhaps next week is more likely. We’ll keep an eye on how this picture shifts in coming days.
Join us Thursday in Discord as we seek to take advantage of 0 DTE opportunities that pop up on our GEX screen and we’ll discuss other developments in broader markets.
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