Trick Or Treat? Looks Bleak…
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Looks like seasonality (down into the election) decided to rear its ugly head. In Discord yesterday, we anticipated a gap today, but we didn’t know which way the gap would be. The decisive clue that more downside was in store was the fact that we started out below the Hull Moving Average. Now we need to look at some possibilities regarding what happens next. Yesterday, we properly identified the gamma (GEX) cluster at 485 on QQQ for this Friday as noteworthy, but what’s next? We go over some observations regarding SPY and some other tickers in our latest YouTube video we just posted here.
Looking at QQQ’s chart, we see an important spot as we look at today’s close near the lows, an area marking prior tops, though it’s about halfway between the middle Keltner channel and the lower Keltner.
On the positive side, QQQ is entering the lower G2 Dealer Cluster, which is a spot where we’ll watch for potential reversal. This matches the yellow line on the chart above quite nicely as well. We need to see what happens in the green box, which ends at 478. Below that and the lower Keltner at 473 becomes a possible target.
QQQ GEX Levels: www.geeksoffinance.com
Looking at the GEX Intensity Gauge on the left side of the GEX Data Graph below, you see that QQQ total GEX is solidly negative, but how does the current GEX negativity compare to other times over the last 52 weeks? QQQ has a ways to go before printing a negative GEX number that’s extreme by that standard. But it’s not a prerequisite for QQQ to reach an extreme in order to reverse, though extreme conditions are sometimes ripe for reversal.
QQQ GEX Data Graph: www.geeksoffinance.com
SPX seems to have a little more room to the downside to make it to the yellow line at 5670, which may be a target before SPX reverses. We also have the lower Keltner around 5639. The Hull (the pink line) is declining rapidly, and before going long as a swing trade, I would prefer to see the Hull work its way down so that price can cross back over to the positive. This may take a few days, which may fit with the timing of an election low (or close to it). I would personally prefer that instead of an instant rebound higher, which muddies the waters and introduces a possible wide chop zone that would surely wreak even more havoc on directionally-oriented traders.
The indicator targets and GEX seem to mesh a little more “cleanly” with SPX, which is why it’s good to look at more than one index, or even more than just SPY, despite SPY and SPX containing the same components. SPX has a wide G2 Dealer Cluster Zone between 5600-5700, so either 5670 or 5639 fit well within those boundaries.
SPX GEX Levels: www.geeksoffinance.com
We’ve had some bullish ideas lately, but we’ve also acknowledged uncertainty, hence the QQQ hedge we placed in the Educational Portfolio. Current P&L shows that the hedge is doing its job, keeping us in the black on existing positions. We do take losses on occasion, and we do have some volatility within the portfolio (subscribers can click on the positions on our website for details of strikes and expiries for each trade, or in Discord).
One last note about the VIX- The VIX has been in an uptrend above the Hull, rising above the 21 target we had. 25 looks possible now. But an elevated VIX heading into the election brings with it the risk of those positions then unwinding and causing a short squeeze, so be careful over the next few days!
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We recently posted a YouTube video and we have many short videos for you to review where we cover a variety of predictions and educational topics.
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