Upside Path Chosen. Permanent Pathway Or Pyrrhic Victory?
Gamma (GEX) continues assisting with our intraday calls in Discord, with 5775-5780 a clear high probability target early in the day based on our 0 DTE GEX data graph from our website. Today we were also able to pivot to focusing on QQQ, which continued displaying higher GEX targets yet to be hit after SPX reached 5775.
We discuss this in today’s YouTube video, as well as potential ideas in NVDA, GDX, and some other items and developments to watch. You can watch the new video here.
SPY and SPX acted just as we expected after closing above the Hull Moving Average yesterday. Even better, markets opened up flat, allowing positioning by bulls to capture a lot of the run that occurred after the cash session opened. Keltner channels still indicate upside of about 1% for SPX and QQQ before reaching Keltner resistance. This resistance can be overshot, so don’t view it as an absolute certainty or precise boundary, and sometimes price falls short, too. But given where we’re at, and with CPI and jobless claims in the morning, we could easily see a volatile push higher, even if it fails and reverses before the market opens. Or we may gap down and see the dip bought..I lean toward 580 SPY/5825 SPX being tagged at some point. Then we can evaluate pullback possibilities within the context of this bullish move.
Why are we looking toward the possibility of a pullback with so much good happening around us? Or shall I say, happening only within stock markets? Real world digs aside, GEX shows that we are now tagging a dealer cluster zone where we might see some selling, though this box fittingly stretches to the same levels as the Keltner channels, and even a bit further.
SPX GEX Levels: www.geeksoffinance.com
SPX shot up to nearly 2.1B positive GEX, a level last seen or exceeded on September 19. It’s noteworthy that really high GEX levels in this environment (stretching back at least a year) have often served as contrarian signals more than anything. This September 19 GEX high, for instance, also coincided with SPX price essentially moving sideways (with some ups and downs) until October 4, roughly 2 weeks. Longs initiated September 19 would have been a little frustrated, at least based on normal human impatience.
SPX Historical GEX: www.geeksoffinance.com
This mixed view gets back to our original question- Are we looking at a huge shift to the bullish side for the market, or a last gasp and brief celebration before election year seasonality slams us into the middle of (or late) October? We don’t have the answer, but let’s keep looking at various points of evidence.
The VIX has been behaving quite nicely with our views lately, rejecting the top of the 2-hour Keltner channel. Notably, we don’t see daily option volume at higher strikes like we did before the move higher from the low/mid teens to the 20s. In fact, we see the highest volume at lower prices, at the zero GEX line which coincides with the lower Keltner at 19.
VIX GEX Levels: www.geeksoffinance.com
The VIX closed below key resistance levels shown on the chart below, such the Hull Moving Average at 21.01 and the middle Keltner at 21.09. Furthermore, the VIX closed below two other indicators I like to use, the 9-day SMA and the 15 period EMA. Combined with the GEX picture, I’d say we have pretty good odds of dropping a bit more and deflating some of the risk premium. Perhaps this coincides with a 1% move in SPX.
CPI and Jobless Claims will be reported premarket, not allowing for easy adjustment of your positions unless you trade futures, but we will be able to react to the opportunity created for the cash session, and we’ll consult with our GEX charts to try and find something compelling. The 30-year bond auction later tomorrow can serve as a catalyst for volatility, as well. Join us in Discord as we navigate the waters of the market tomorrow!
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We have an interesting week ahead to navigate, and we hope you’ll join us in Discord, where we’ll be alerting our guests and subscribers to any meaningful development we see.
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