Go Time: Big Tech Earnings
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GOOG, AMD, and SNAP are a few noteworthy tech names that reported after the bell today. SNAP and GOOG are up in after hours trading, but AMD is down. Who knows where they will trade by tomorrow’s open? Europe will have a chance to set the tone initially, then ADP Employment will be released at 8:15 AM ET, possibly impacting the markets direction as well. Tonight’s YouTube video (you can view it here) goes into SPY as well as a few individual potential opportunities we’re watching. As the week goes on, we continue to see the big names report, including MSFT and META after the bell tomorrow, and AAPL and AMZN on Thursday after the bell (clear signs of alphabetical collusion!).
QQQ continues to react in the most bullish fashion as we approach big tech’s earnings this week, holding the Hull Moving Average and climbing reactively after attempting to break below. The upper Keltner channel has risen to 508.88 and it represents a potential magnet as long as we’re above 495.
QQQ’s GEX also increased after bouncing off of the zero line, certainly not a bearish sign.
QQQ Historical GEX: www.geeksoffinance.com
Perhaps the most worrisome thing for QQQ is the current GEX positioning, which does include a sizable cluster at 510 (fitting well with the upper Keltner channel just under 509), but we are already in the G1 dealer cluster where we might see a stronger attempt to sell this index off. And look at the G2 cluster, the possible buy zone: It’s quite far below, 450-460 area. Hopefully tech “true believers” have a small parachute or one of those flying squirrel suits in order to have some sort of escape plan in the event of an emergency.
QQQ GEX Levels Chart: www.geeksoffinance.com
SPX’s chart looks more questionable, failing a peek above the Hull, though still holding the middle Keltner and painting a green candle.
SPX had a bullish increase in GEX, too. What’s going on here? Is QQQ faking out participants to the upside, when really it’s SPX that will prove correct and act like gravity to pull QQQ back? The disparity is very unusual in recent history, particularly given the overlap in top holdings for both SPY/SPX and QQQ. Such a divergence requires big performance differences in the unrelated holdings, which will prove to either be an opportunity for the beaten up defensive stocks, or else tech will simply catch down. Another option is a large cyclical shift favoring value over growth. But timing the end of a trend that has gone on since 2008 is not a game I want to play. Let’s dig a little deeper:
SPX GEX Levels: www.geeksoffinance.com
SPX’s GEX Levels chart looks concerning in the short term similar to QQQ’s. Some room above, but a positive GEX shift beyond what we’ve seen is needed to have more confidence in sustained upside. Otherwise, 5450 seems like a long way down…
SPX GEX Levels: www.geeksoffinance.com
On a more bullish note, at least for now, IWM continues to show the importance of the yellow trendline I drew last week, bouncing off of an attempt to break lower, and in fact, IWM closed above the Hull (barely) for the 2nd day, adding some degree of bullish confidence that 230 is possible. The upside potential certainly seems greater in the short run for IWM compared to others, and given the disparity we’ve seen with tech, it wouldn’t surprise me to see IWM go up even in the event that QQQ drops. “Rotation!”
Lastly, a note on IWM GEX, which is quite neutral at the moment. It had a sharp drop off since 10/16, but note that GEX with IWM has sometimes been a contrarian signal when it reaches a high point, even if it hasn’t triggered a GEX Intensity warning by reaching an extreme. The 16th was near a market top as well as IWM’s GEX top, so we can’t always assume high GEX is an easy layup or low GEX is an easy short.
IWM Historical GEX: www.geeksoffinance.com
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