Seasonality Revisited & More
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We didn’t see much happen today, which is not a huge surprise as the market awaits big tech earnings this week. We also have a lot of economic data being reported this week, starting tomorrow morning 30 minutes before the regular cash session begins. We posted our regular evening YouTube video (you can view it here) where we discuss observations about the VIX, SPY, the AAII survey, and a few high-level potential opportunities we see in SHOP, TSLA, PLTR, and KO.
Let’s jump right into a quick analysis of SPX: We see continued rejection of attempts to overtake the Hull Moving Average, which has become resistance instead of support ever since the October 21 breach of the Hull to the downside. 5782.9 is the next support level (as indicated by Keltner channels) and 5932 is potential upside. The Keltners are angled upward in a bullish fashion, so we need to be aware of the upside risk in the event that the Hull is overtaken.
SPX gamma (GEX) is once again moving toward the positive side despite the red day, and 6000 has overtaken 5900 as the largest upside GEX cluster. This quiet, bullish development doesn’t mean we hit 6000 tomorrow, but it shows a potential larger picture shift toward expectation of continued upside. Most of the GEX clusters I see are late November into late December at the 6000 level, so we may still experience the historically expected seasonality of a drop into the election and then a rally into year end, which may trap some early bulls who can’t take the pain of another temporary pullback.
SPX Historical GEX: www.geeksoffinance.com
QQQ joined SPX in dropping today, but the decline was from a big gap up, and once again, QQQ has held the Hull, a possibly bullish sign. Our bias is generally to the upside above the Hull and bearish below, also factoring in GEX with this assessment. Interestingly, QQQ total GEX is negative. With all of the big tech earnings reports this week, it’s hard to draw any solid conclusions just yet. We’d rather be open-minded toward a variety of outcomes this week and we have both bullish and bearish positions in our Educational Portfolio at the moment.
Let’s turn our attention toward a defensive name, Coca-Cola (KO). We are currently at a spot that represents May 2022 resistance. We might see KO drop to 65 or so to retest those multiple subsequent tops, but overall, the chart at least presents an argument for expecting an attempt at a rebound from this spot.
KO is touching the zero GEX line and big GEX at 70 remains. For me, my conviction grows when I see Keltner channels and the Hull also backing the conclusion presented by GEX.
KO GEX Levels: www.geeksoffinance.com
The economic calendar adds a possible element of complexity to the already dicey gauntlet of navigating earnings. Any given day between Tuesday morning and Friday, we have numerous events that could overshadow or exacerbate any reaction to earnings. Join us in Discord where we will post possible opportunities that we see and we hope to engage in discussion with you as well.
Join us in Discord tomorrow, where we often share important updates as we see them reflected on our GEX dashboard. Thanks for reading and consider our promotion to directly access the data on your own timing.
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