Bullish Expectations Remain..For Now
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Well, the election is in process as we type today’s newsletter. There will be no YouTube video today, though we’ll do our best to resume regular broadcasting tomorrow. Our videos are fairly short, so give our channel a look if you’re curious about recent market commentary and ideas as well as gamma (GEX) concepts explained.
IWM futures (RTY) are on fire at the moment, but let’s take a brief look at QQQ and SPX. QQQ leaves us with a neutral GEX picture, yet GEX has been trending positive the last couple of days, and the chart looks bullish. I left the yellow line drawn on my chart over the last few days, and price appears to be respecting the general area identified as support. We also see today’s close above both the Hull Moving Average and the middle Keltner channel. Is today’s close over both resistance areas another trap, or will QQQ see 510 next?
Total GEX for QQQ has been trending positive since the October 31 low, though it is concerning that we’ve had a consistent set of lower lows since early October. Overall, we see a neutral picture, so I don’t draw any conclusions from the existing marginally positive GEX structure.
QQQ Historical GEX: www.geeksoffinance.com
465 QQQ is the largest negative GEX level, and 510 is the largest positive strike, so the magnitude of potential moves favors the downside, yet from a probability standpoint, some factors point to 510 as a more likely initial stop. Regardless, I’d rather wait for an extreme to be reached and then react as opposed to taking a directional bet when we’re essentially in the middle ground.
QQQ GEX Graph: www.geeksoffinance.com
The QQQ GEX Levels chart below shows that QQQ holds above the zero gamma line today, with 510 as a realistic target above, 460-465 below.
QQQ GEX Levels: www.geeksoffinance.com
SPX’s chart seems to be less bullish than QQQ, with the middle Keltner still remaining as potential overhead resistance. I do place more weight on the Hull Moving Average, but we really don’t know what happens around 5790, so I will keep 5750 in mind as a potential stop for any bullish view in the near-term, since that represents the Hull at the moment.
Perhaps QQQ is the leading indicator this time? We’ve discussed the roughly 80% overlap in the top 10 holdings for both SPX and QQQ, and despite the question mark presented by the Keltner channel with SPX, we do see that our GEX Levels chart shows SPX is in the G2 Dealer Cluster, where we expect a good shot at a rebound for SPX.
Furthermore, one thing we noted in Discord earlier today is that the GEX clustered around the 6000 has shifted to near-term maturities including November 15, with 6055 and 6100 being represented significantly for December. This is a bullish shift that adds confidence to the bullish case, though we still need to be aware of the risks. My guess is that the full move in either direction will NOT occur entirely overnight tonight, so put aside FOMO and wait for a trade where you have good odds and less speculation involved in the risk being taken (obviously there’s always risk with trading, though).
SPX GEX Levels: www.geeksoffinance.com
Speaking of risks, I wouldn’t call this a 5-alarm fire, but the VIX closed at the middle Keltner channel, also maintaining this gently upward sloping channel established since July. Volatility can certainly rebound here, with VIX 25-26 as a possibility. Presumably, a clear election winner may instead see VIX approach 15 below.
We’ve certainly had days and days of VIX option volume appearing elevated at 15-18, though volume alone doesn’t give us the underlying direction of the trades. Regardless, we’ve had a fairly good week so far finding intraday trading opportunities and we will enter tomorrow with the context provided by today’s closing values (and tomorrow’s updated GEX picture) and we’ll go for another repeat of a successful trading day.
VIX GEX Levels: www.geeksoffinance.com
Join us in Discord tomorrow for our discussions around what’s happening as the day progresses!
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