Decision Time Is Near
We had another tricky day today in the market, with a gap down that started following through to the downside before reversing and rallying to a mere 2-point deficit relative to Monday’s close. The pattern since October 17 has been a slightly downward consolidation, but each day has been choppy, making for difficult trading conditions (from a traditional perspective).
We noticed some highly unusual volume on VIX options at the 13 strike, which we discuss in a new YouTube video (which you can view here). The video also discusses new ideas in AAPL, GOOGL, LMT, and the broader market.
We aren’t exactly certain what the VIX volume means for the future of the VIX, but we can observe that the bias has been lower since we saw the VIX structure shift lower, with 15 as a probable target below the 18 area.
VIX gamma (GEX) Levels: www.geeksoffinance.com
In the short run, it’s entirely possible we will see the VIX spike to 20-21 as the S&P continues its decline to the theoretically magnetic middle Keltner 5763 area, which we mentioned as the likely target as long as SPX stayed below the Hull (currently 5872). A gap above the Hull or a cross above it opens the possibility of reaching 5900+.
Even if we do continue lower in the short run, the chart is in a solid uptrend, and we don’t see GEX in a solid negative position, either. So our bias based on the summary of indicators and positioning is still to the upside. Today, SPX GEX actually increased, reaching 739M, a fairly large increase of around 500M since yesterday.
SPY Historical GEX: www.geeksoffinance.com
Looking at our 3D chart, we still see 5900 as a sizable GEX cluster concentrated on Friday 10/25. GEX totals would have been even more positive excluding the 160M of negative GEX at 5850 (the big downward spike you see). That cluster will disappear tomorrow morning as it expired today. As far as these charts go, for your information, we run a nightly GEX update, and then starting at 8 AM ET, we run updates every 30 seconds.
SPX 3D GEX: www.geeksoffinance.com
QQQ has been especially tricky, actually rising since mid-October, but playing with the Hull both above and below the line, a chopfest with gap downs to kill bulls before rallying back over the line, presumably killing some bears, too.
Our GEX Levels chart below shows QQQ 500 remains as a sizable target and the lower edge of the G1 Dealer Cluster Zone, where we expect potential for reversal back down.
QQQ GEX Levels: www.Geeksoffinance.com
QQQ GEX has also been increasing lately, though not in a straight line. But with positive GEX and a cluster at 500 above that remains untapped as of yet, the odds would seem to favor a surprising move to the upside to convince bulls we’re never going down again, only then to reverse strongly.
QQQ Historical GEX: www.geeksoffinance.com
One of several ideas we cover in our YouTube video is LMT, a big defense sector play that dropped considerably today. We are only a few dollars away from the big negative clusters at 565 and 575, but with positive GEX overall and a large positive cluster at 600, we wouldn’t be shocked to see a sizable bounce from 565 or so up to 600, which also represents the zero GEX level.
LMT GEX Graph: www.geeksoffinance.com
join us in Discord tomorrow and we will address some of the tickers we’re watching as well as share any potentially actionable GEX setups we’re seeing in the morning with the indices. Thanks for reading!
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