Resistance Into FOMC
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We mentioned AAPL a couple of times late last week, and look at what happened, gamma (GEX) magic worked itself again with two big green candles this week, even in the face of a declining market yesterday. Potentially presenting a challenge is the fact that all indices as well as AAPL are now facing resistance. Encountering resistance doesn’t necessarily mean stocks falter, and we discuss some positive and negative merits in today’s YouTube video, which you can watch by clicking here.
The chart below shows AAPL’s Keltner channel to be in a downtrend, and the two big candles took AAPL straight to the middle Keltner channel, a logical area for a possible pullback. On the positive side, AAPL is above the Hull moving average, which gives me an overall positive bias from my perspective, but the distance between the current price and the Hull is so great that a drop of some sort would not be surprising. But what does GEX have to say?
AAPL’s GEX picture is currently positive, demonstrating solid GEX at 240, 250, and even 260, with volume at 240 and 250 standing out. 240 is no surprise, since we’re trading in that area, but 250 may represent a solid target if we see continuation. The upper Keltner channel is at 254 and declines daily given the downtrend, so the 250 GEX and the upper Keltner are fairly close together.
We often talk about being bullish and bearish in different timeframes. We see AAPL GEX at 250 that represents a possible target, but if we look more closely at how GEX is spread out across expiration dates, most of the 250 cluster is on the February 21 expiration, with this Friday’s largest cluster resting at 240 currently, and some at 235 as well. One potential conclusion from this is (though far from any sort of guarantee) is that we might see AAPL pull back later this week before resuming its climb beyond. One last wrench to throw in the mix- with earnings coming up, this entire picture may change, now that you’ve read various hypotheticals (your brain appreciates the thought experiments).
SPX reached the price that represented the Hull yesterday, rooughly 6068, but the increasing Hull now shows 6090.82 as the potential overhead resistance. Being below the Hull is a short signal in my book, though we can see price increase to retest the area from below before another attempt to sell, so we have to keep an eye on price action and GEX as well.
SPX’s lower G2 zone is between 5700-5800, and we’re already approaching the upper Dealer Cluster area, where dealers may become sellers, though the current momentum has been higher since Monday’s gap down.
SPX GEX has increased back to 775.5M, a significant increase despite the perspective shift caused by the extreme GEX reading we saw recently at the top.
Prior to Monday’s gap down, QQQ appeared to have the greatest bullish potential in terms of the distance to the top Keltner, and that situation is here again, with 527 representing the Hull, nearly 1% higher from today’s close. With the VIX almost back to 15 again and other signs of resistance looking at SPX and AAPL, it’s hard to say whether or not QQQ will make it back toward filling the gap, so consider your portfolio risk when positioning for more upside or downside.
We were bullish on DIA recently, and to my amazement, it just keeps going, reaching well over the upper Keltner channel while still maintaining above the Hull. A drop below 446 may mark the beginning of a much needed pullback toward 431-442, but for now, DIA has definitely been the envy of a jealous tech sector. Perhaps another rotation is around the corner? Join us tomorrow and we’ll take our cues from GEX as the day goes on, with the FOMC announcement at 2PM ET and Powell stepping up at 2:30 PM ET to shake the tree a bit. Will gravity apply or not?
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