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Last night’s futures low was slightly under the SPX 4-hour Keltner channel (5913 SPX, 5935.5 ES), also marking the low for the day as indices had a nice rally from the gap down. Tariff fear switched to tariffless optimism as traders re-accustom themselves to Trump’s negotiation style. Headlines aside, we identified a likely pullback late last week, and once it began, we identified relevant levels that worked. With more big tech earnings coming up this week, and some other big names like PFE that will impact their own respective sectors, participants will likely move on, of course with the ever-present risk of unexpected news. We discuss some important aspects of tickers including BTC, the VIX, and the broader market in today’s YouTube video, which you can watch by clicking here, and below you’ll see the earnings calendar for the week. I’ve highlighted a few names that jump out as carrying the potential to move the index.
I’m not confident in what happens tomorrow, but we can still review a few observations that might cause you to lean one direction or the other. SPX looks relatively constructive in my view, especially given that it closed above the middle Keltner channel. I don’t like that we’re below the Hull, but there’s a lot of distance between the current price and the Hull, so it’s entirely possible we see the gap from Friday filled and possibly even more before there’s a serious challenge to a rebound attempt. Logically speaking, unless someone leaked AMZN and GOOGL earnings, you would think that any further dip prior to their reports this week would be a buying opportunity, and gamma (GEX) seems to back that. At a cursory glance, it seems that the odds still favor bulls, but as I said, I have low conviction particularly looking farther out.
I find it very interesting that SPX total net GEX is only barely negative, and in fact, if you subtract the negative GEX that expired today, GEX is positive for SPX and very close to where it was Friday. This is neutral at worst.
The upper Dealer Cluster zone is stubbornly elevated at 6300-6400, a red flag for bears, and we’re in the lower Dealer Cluster zone. We see lots of total net GEX spread across higher strikes, represented by the purple lines (the light blue is simply today’s volume at those strikes).
One word of caution about the VIX: We saw the 4-hour Hull tested perfectly, and it is holding. The VIX still has a shot at higher strikes, but a review of various timeframes slightly tilts my bias toward expectation of reaching the 16s, so we’ll see what happens and in what order it happens.
Very little volume at higher strikes on the VIX today, except for the 30 strike, which has been growing for some time. The GEX at 30 is concentrated almost evenly on February 19 and March 18, with a slightly higher amount of GEX on March 18 (shown on our 3D graph, not shared here today). I don’t see any reason to expect VIX 30 tomorrow, in other words, but anything can happen.
One last pivot to a different idea- a few days back we discussed FCX in our YouTube video, a name we’ve successfully traded in the past and a good diversifier for our portfolio since it has a commodity focus. FCX has outperformed the market over the last few days, basically unchanged for 5 trading sessions, and it has my attention today in particular, as the declining Hull is finally meeting FCX’s price.
The largest GEX cluster for this Friday is at 38, which coincides with the middle Keltner channel, a viable target if we close above the Hull soon.
FCX’s total GEX has been increasing positively overall since mid-January, so this is a positive divergence I will be watching closely in the next day or so.
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