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SPX and QQQ continue to attempt higher levels since Monday’s gap down, at least accomplishing higher highs for the week on an intraday basis. QQQ managed to come closest to tagging the Hull moving average from below, while SPX fell roughly 20 points short of reaching that important support-turned-resistance area. Gamma (GEX) continues to support higher prices eventually, and we discuss this idea and more in today’s YouTube video, which you can watch by clicking here.
SPX does not look bearish overall, and volatility since 2022 has really only provided buying opportunities before the next move higher. Eventually this will change, but for now, GEX certainly provides an argument that we will continue the trend of higher highs and higher lows. We do see negative divergences with the VIX, but more on that later.
Friday is the last day of January 2025, and despite the mid-month low, all we’ve seen is a higher low that has resolved in bullish fashion so far. Zooming out a bit further, we see that markets have largely been consolidating since early December. The Hull at 6107 for SPX is the next hurdle, and I am expecting that (at a minimum) we retest that level tomorrow. PCE and PMI reports in the morning can certainly serve as excuses for some volatility.
Our GEX levels chart above show that positive GEX clusters are far more significant on a net basis than negative clusters at the moment, while the lower chart shows positive overall GEX that falls within our neutral range. These combined data points lean bullish.
QQQ has been weaker than SPX or DIA, which is either an omen or potentially an opportunity to see QQQ reach the same indicator targets, with 527 representing the Hull and approximately 540 representing the top Keltner channel. The GEX picture isn’t nearly as optimistic as SPX, but the upper Dealer Cluster zone does cover the 527 level that represents the Hull.
We do see significant negative GEX at 6000 expiring tomorrow, but that is offset by positive GEX at 6100, and 6090 even has a noteworthy cluster. If Friday ends up being volatile, we may see both visited, merely 1.5% or so (30 points up and 70 down) of full range to touch those numbers.
QQQ almost perfectly retested the Hull, maybe too perfect, so we’ll see if QQQ goes beyond 527 to close Monday’s gap or not. Today’s red candle still printed a higher low and higher high intraday.
QQQ also barely closed in positive GEX territory, so it’s flirting with the line that I use to determine my bias of being long or short. Similar to SPX, total GEX in inconclusive, and SPX appears to have more bullish positioning in terms of individual GEX clusters at higher strikes.
In summary, while SPX saw a bullish shift this week with growing GEX at 6200 and even 6300, we still have Hull resistance to contend with, and the VIX (as shown below) presents evidence for a potential pause in the rally as well. We saw VIX:VVIX divergence yesterday, and today the VIX did close above the daily Hull as well as the 2-hour Hull. In the case of the 2-hour Hull, it’s the first time in 6 candles that we have a bullish volatility signal. Any spike in volatility may be short-lived given the other things we’ve mentioned, but it might be worth considering in the short run.
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