FOMC Blast-off Or Blues?
We once again got what we wanted today, a rally after yesterday’s drop. This doesn’t happen every day, but we appreciate it when it does. We also provided our customarily concisely worded analysis of what gamma (GEX) told us in the morning in Discord, which is precisely what happened, a run toward 5750, evident by both the net GEX at 5750 as well as the accompanying GEX flow (screenshots of my screenshots don’t expand, but you can see them in Discord):
Yesterday we said “to reach that 580 [SPY] target, we need to hold above the declining Hull line at 572, and 560-562 sits below as an important pivot as well. The Keltner channels are still in an uptrend, though not a steep one.”
While the Hull declined to 571, SPY still closed above our target, finishing the day at 573.17. That Hull Moving Average must be a very strong type of pink. This opens up reaching 580, which we address in our latest YouTube video posted today. Click here to watch the video, which also mentions a few individual tickers and more.
Note that with the VIX still elevated over 21, we see potential for a drop to 19-20 (maybe even lower) if the market decides to head for that SPY 580. The more elevated VIX also means that we shift toward looking at premium collection when we place trades instead of being exposed to losing value if realized volatility ends up being lower than what’s priced in by the market.
SPY GEX took a sharp rebound back to almost the zero line, just in time for FOMC minutes to be released tomorrow as well as 7 different Fed speakers throughout the day. I hope their speaking fees are sufficient.
SPY Historical GEX: www.geeksoffinance.com
Let’s briefly look at other ideas shared in our YouTube video today, starting with AMZN. We also mentioned AMZN very recently in another YouTube/newsletter edition, and the opportunity still appears to be here, given the lack of movement. Despite the recent downtrend, price appears to be more consolidating within the broader uptrend we see over the last couple of months, and Keltner channels are still trending higher as well. A move back over the Hull opens up the 190 area also shown on the GEX chart. We initiated a put credit spread trade yesterday in AMZN in our Educational Portfolio.
GEX indicates 190-192.5 as a possible resistance area, shown below as a red Dealer Cluster Zone. Today’s volume was largely concentrated on higher strikes, which seems bullish, given the large GEX clusters at 180,190, and 195. Price is consolidating just above the zero GEX line.
AMZN GEX Levels: www.geeksoffinance.com
Looking at the 3D chart below, we see considerable GEX on AMZN at 190 expiring Friday the 11th. On the flip side, we do see negative GEX at 180 also expiring Friday, but we’re already close to the lower end of those large clusters. Which cluster remains to be hit?
AMZN 3D GEX: www.geeksoffinance.com
Johnson & Johnson (JNJ) closed 0.08 above the Hull, a good sign, and it’s near the bottom of the daily Keltner channel. 170 seems to be strongly indicated by GEX levels, and this is the 2nd day out of the last 3 where JNJ closed above the Hull. Seems like an attempt higher might happen soon, from the looks of it.
JNJ rests in a lower Dealer Cluster Zone, and today’s volume was uniformly at higher strikes.
JNJ GEX Levels: www.geeksoffinance.com
Lastly, let’s briefly check out NFLX, which also broke above the Hull, opening up 745-750 from here. We discuss NFLX in more detail in our YouTube video.
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.
If you’re interested in learning more about our strategy approach, we address all of these topics in our Geek University course which is included in all memberships.
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