Is QQQ Trying To Leave The Party Early?
Markets started out this morning appearing to be ready to pass the moon and fly straight to Uranus (or maybe I should focus on a different planet, like Pluto, or is that even considered a planet anymore?) when QQQ decided to turn from green to red after the cash session opened. More on that in a minute…Check out today’s YouTube video where we discuss several ideas and complementary themes not covered in today’s newsletter.
We also locked in some gains and losses today in our Educational Portfolio, which is always visible to our subscribers (who are alerted in real-time to changes), closing out a QQQ hedge for a full loss ($435, or a little over 4%) but taking gains on a NFLX long trade amounting to $1,550. Most of our positions are single-digit percentages in size, 2-6% typically, so our 115% performance has been achieved without taking irresponsible risks, in our subjective view. Asymmetric trade construction is what has kept our gains looking fairly good, even with less than 60% accuracy.
Geek’s Portfolio Performance: Discord
Alright, back to QQQ. The incursion into enemy territory this morning (below the top Keltner channel) appeared to be headed toward at least the Hull Moving Average at 503.5 before being “stick saved,” closing back above the upper Keltner.
I did notice at least some degree of shifting in a more positive GEX direction with the 520 strike on QQQ, but we still don’t see much above that, and 520 is a mere 1% or so away from current prices, so overall we are still in a situation where GEX is not signaling significant upside from here. As mentioned in the YouTube video today, we may be looking at a pullback soon, but we aren’t predicting a crash, at least we can’t see any signs that would make such a warning responsible by any means. I guess when the market moves as little as it did today overall, maybe -5% or -10% feels like a crash? Perhaps to some.
QQQ GEX Levels: www.geeksoffinance.com
QQQ GEX continues reducing over the last 3 days in a row, all within what we consider “neutral” GEX territory.
QQQ Historical GEX www.geeksoffinance.com
QQQ definitely looks more negative than SPX at the moment, with SPX reversing lower as well, but not as much, and SPX also never breached the upper Keltner channel. In my view, these indices have such overlap that ultimately QQQ dropping enough should drag SPX down as well, unless there’s a bizarre rotation to energy and other sectors that would be enough to offset the tech behemoths (unlikely in my view, unless a very short timeframe, or over a very long period of time, if that makes sense).
SPX is also still in the upper G1 Dealer Cluster Zone, and we also see additional GEX clusters up to 6100 and beyond.
SPX GEX Levels Chart: www.geeksoffinance.com
Given that most of the higher clusters are situated further out for SPX, I don’t see great odds of reaching beyond the 6055-6100 area in the near-term. For tomorrow, this negative cluster at 5970 has my attention.
SPX 3D Graph: www.geeksoffinance.com
The VIX finally saw some meaningful volume at higher strikes today, with 16 and 17 showing a lot of relative activity. This is happening as we see VIX at an interesting support area for volatility since the Summer and we are in a Dealer Cluster Zone as well, so reversal to a higher level is completely understandable (though not guaranteed) from here.
VIX GEX Levels: www.geeksoffinance.com
Lastly, do we have some events this week that might be a bit different than some OpEx weeks? Thanks for asking, in fact, we do. The bond auctions aren’t likely to be major events, though I gave them some yellow ink attention, but CPI, PPI, and various Fed speakers will likely be significant to the market. Given the very bullish previous week or two, will market makers seek to kill a lot of call premium this week, or maintain gains and kill premium through further VIX crushing? I don’t think the odds are great for the VIX to completely collapse this week, so we need to keep our eyes on the possibility of QQQ re-exerting its negative ways again before the week is over.
Econoday.com
Join us in Discord tomorrow for our discussions around what’s happening as we close out the week!
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