Early Warning From DIA?
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Today was the first day in a while where our Discord 0 DTE channel saw an accurate early preview of where gamma (GEX) was headed for SPX, but it took all day to get there. SPX got there though, reaching the advertised 6080 right before the close, closing at 6083.57. We’ll pick up where we left off in the newsletter, starting with DIA, and we cover a number of additional tickers including BTC, NVDA, IWM, and AMZN in today’s YouTube video, which you can check out by clicking here.
DIA has been leading both bottoms and tops slightly before QQQ and SPX, as the chart above shows. Will the next short-term pullback look the same? One day is not enough to say with certainty, but DIA did leave a red candle in place by today’s close. The Keltner channel is sloping upward, which looks bullish, but DIA reached the upper Keltner channel must faster than SPX or QQQ and now continues failing at the Hull moving average. Closing below the Hull is something I view as a short signal, though it doesn’t mean DIA will have a large retracement. It might, but it also might consolidate sideways for a period of time, at least until closing back above the Hull. The combination of being below the Hull and very close to the upper Keltner channel is not typically where I choose to enter long, that’s for sure.
The historical GEX graph below shows GEX declining since the mid-January GEX high. I find it interesting that GEX topped out right before the last push higher in price, which lasted for about a week before consolidating sideways. During this entire time, GEX was decreasing, leading to today’s slightly positive reading near the zero line.
DIA still has considerable GEX at 450, and we saw volume at mostly higher strikes today, so it would not be surprising to see another push higher in the next few days, though that’s not a requirement before seeing more downside. The bottom line is that DIA was outperforming early in this rally, and now it’s underperforming, so I will continue watching DIA for a potential preview of where we might see SPX following eventually (in conjunction with GEX and other technical factors).
SPX has been the last one to board the bull train this time around, but today it painted a candle very similar to IWM yesterday: A gap above the Hull, an attempt to sell back below the Hull, then a close near highs. It’s virtually the same candle, amazingly. The Keltners are far apart, but the trend is still upward overall, with upside of almost 6200 eventually.
SPX GEX continues improving as well, crossing our neutral/bullish line-in-the-sand at 1B to end the day with positive 1.4B total net GEX.
The timing of hitting anywhere close to 6200 remains unknown and uncertain, which is why we’ll continue incorporating other factors into our comprehensive analysis. The current G1 Dealer Cluster shows 6100 to be the beginning of the red upper Dealer Cluster, so a pullback could technically begin anytime once we’re near or within that box. We still see more GEX weighted toward higher strikes, including 6150 and 6200, even up to 6300, and overall we think the odds of reaching those targets by late March look fairly good.
The VIX had a brief last-minute plunge to 14.99, one penny below the 15 target I’ve mentioned, quickly bouncing back to 15.5. This technically resulted in a successful test of the 2-hour Keltner channel, and the VIX closed above the Hull, a bullish signal for volatility in my process. So this is something to watch. There are times when the VIX begins marching higher alongside the market, so we don’t necessarily see immediate correlation with a market drop, but it’s possible we see an attempt to rebound for the VIX at any time. A loss of 15 and holding below brings the 4-hour lower Keltner at 14 into focus.
With the initial reaction to AMZN this evening being to head lower, but the jobs report in the morning, it’s hard to say exactly how Friday goes, but we’ve noted QQQ 535 as a “sticky” level that has popped up most of this week on the GEX charts, so let’s see if we can spend at least part of tomorrow higher yet again.
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. We’ll be analyzing GEX after the open to see where we might go by Friday’s close.
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