Higher Into March..What Happens In Between?
2025 WINTER SUBSCRIPTION SPECIAL- Due to popular demand, we’re extending our Winter Special of $300 off of the annual Portfolio Manager subscription through the early part of February! We’re on the brink of rolling out even more new features, including backtested algos for our subscribers to use, so we hope you’ll join us for the ongoing improvement of our total offerings! Enter code WINTER2025 at checkout.
Other than today’s 0 DTE GEX that expired at the close, 6200 is still the largest GEX cluster for SPX. The larger concentration on today’s closing price relative to yesterday contributed to a shift downward in what we show as the Dealer Cluster zones, but hopefully that explanation makes sense to you in terms of why the zones shifted. Ultimately, we’re left with a similar picture (almost exactly the same for QQQ): We see price near the lower edge of the G1 Dealer Cluster zone, with room to stretch deeper into the box, and a fairly constructive bullish view into late March. What happens between now and then? With VIX and VVIX both positive today, and markets lately choosing more sideways consolidation to “burn” time instead of downward consolidation, it’s a bit hazy, but it’s entirely possible that we see a downside move. If this happens, the response both in terms of GEX and price action will be key. We discuss related aspects of the markets and the VIX in today’s YouTube video, which you can view by clicking here.
On the positive side, SPX rallied from the modest gap down this morning and closed slightly positive for the day, painting a higher high intraday and a higher close. SPX also closed above the Hull moving average. The Keltners are angled upward and to the right, looking constructive for potential further upside.
As mentioned in the opening paragraph, SPX saw its upper Dealer Cluster zone shift downward due largely to the bigger GEX concentrated on today’s expiration, something lacking yesterday. The lower zone actually shifted higher to 6000. We still see the same dynamics as yesterday when we exclude today’s expired GEX: 6200 is the largest single GEX cluster, and most GEX is focused on higher strikes. We have a sizable cluster at 6100 with 2/21 expiry, which we’ll look at next.
6100 is the largest cluster at 2/21, but 6165 is even larger at 3/31, the end of the 1st quarter. When and if we see pullbacks prior to these dates, as long as the positive GEX remains, we will view such pullbacks as buying opportunities.
Circling back to DIA, which we haven’t looked at much recently, price is consolidating mostly sideways as the Keltner channels are pointing sharply higher to the right, a bullish chart configuration. DIA has done quite well compared to QQQ year to date. I don’t like that price is below the Hull, but the bullish Keltners seem to suggest any dip is potentially a buying opportunity.
GEX shows DIA to barely be out of a lower Dealer Cluster, with 450 as the upside target. I will note the higher volume at lower strikes, especially 425 and 440. These numbers match up fairly well with the lower and middle Keltner channels, which may generically imply areas to watch if we drop.
The VIX and VVIX (the index measuring future expected volatility of the VIX) were both positive today, a red flag for market bulls. The VIX can rise with markets for some time, but the exact timing becomes difficult to determine once the red flags start emerging. We see the VIX holding at exactly the 4-hour Hull, slightly above the 2-hour Hull, and just above the 2-hour middle Keltner channel. This is bullish for volatility, and (as discussed in the YouTube video) most of the negative GEX on the VIX is between 15-16 for 2/19, signaling that we’re unlikely to see prices significantly below 15 leading up to the 19th, barring a big shift in GEX.
Our GEX Levels chart shows noteworthy volume at the 30 and 35 strikes for the VIX, and very little interest in terms of GEX and volume below 15. The VIX is also in a lower Dealer Cluster zone.
We’ve pointed out some seemingly contradictory observations regarding the major indices and the VIX, but keep in mind we are dealing with different timeframes that ultimately fit together to form the actual pathway between points A and Z. It’s entirely possible that the pathway is bullish into quarter end, yet we have a volatile drop somewhere in between. Our solution within our Educational Portfolio is to risk small amounts of capital on each trade, diversify (we’re long USO, long some big tech, long precious metals), hedge, and structure each trade asymmetrically using option combinations: We can lose the entire premium on more than one long trade and our hedges can still offset these losses with 3x-7x returns, as an example. Our subscribers all have access to a valuable 5-hour educational course where we delve into these concepts as well as our Discord channels.
Here’s the Discord link if you haven’t joined us yet. Access is free for some channels, and new members have a 7-day trial to see how we operate. We have an active community of thoughtful traders who chime in throughout the day.
If you’re interested in accessing our tools and analytics, be sure to check out our website! More improvements coming in February!
If you’re interested in learning more about our strategy and approach, we address all of these topics in our Geek University course which is included in all memberships.
We recently posted a YouTube video, and we have many other short videos, so give our channel a look if you’re curious about recent market commentary and ideas as well as gamma (GEX) concepts explained.
Thanks for being part of our community and know that we invite your feedback!
The information provided by Geeks of Finance LLC is for educational purposes only and is not intended to be, nor should be construed as, an offer, recommendation or solicitation to buy or sell any security or instrument or to participate in any transaction or activity. Please view our Investment Adviser Disclaimer and Risk Disclosure.
