Friday The 13th & VIX Expiration Wednesday
Early weakness today was not really reflected in the GEX profile, in fact, mid-morning we posted in Discord that 5575-85 SPX appeared to be in focus, a 30-point differential from the 5554 level at the time of posting. Once again, our gamma (GEX) tools gave us additional insight that proved profitable as markets embarked upon a post-European close rally to over 5600 SPX.
We will go over a few short-term positive developments in today’s newsletter as well as our areas of concern, especially attempting to avoid black cats and ladders on a spooky Friday The 13th.
We also address these topics in today’s YouTube video, which you can find here.
Looking at SPX, we see the initial landing within the red Dealer Cluster Zone at 5600, where we expect dealers might be selling. This can stretch higher, so we don’t view 5600 as an absolute ceiling. But in general, we need to be aware of the danger. The lower green zone hasn’t changed, it’s still 5200-5300.
SPX GEX Levels: www.geeksoffinance.com
SPX Keltner channels turned sharply higher, which is a bullish sign, and price closed above the middle Keltner channel. We’ve been discussing a pullback, which still seems to be a reasonable expectation (given a number of overbought metrics), so perhaps a bullish interpretation of a pullback would be a drop to 5530 or so and then another push close to 5700 or higher? With VIX expiration next Wednesday, we need to stay on our toes.
SPX Chart: TradingView.com
SPX total GEX is back in firmly bullish territory at 1.38B, an area that has (paradoxically) marked recent tops, despite not being high enough relative to the last 52-weeks to consider a contrarian “extreme.” In noting a couple of bearish or contrarian points, we want to maintain the context of a bullish intermediate-term shift, despite our view that a short-term pullback is necessary.
SPX Historical GEX: www.geeksoffinance.com
We won’t spend much time on QQQ, but we wanted you to see the GEX Levels chart and point out similarities to SPX in that we are in a Dealer Cluster Zone where selling may occur, and that the lower green dealer zone hasn’t shifted much, still reflecting 440 as a target. Sometimes in an uptrend, you’ll see both Dealer Cluster Zones increasing, so it’s interesting that the potential buy area is not budging despite the sell zone moving a bit higher in recent days.
QQQ GEX Levels Chart: www.geeksoffinance.com
If markets continue to rally, IWM may end up being the late catch-up champion, as it has only just now retaken the Hull Moving Average and is retesting (though initially rejected by) the middle Keltner Channel. It’s entirely possible that this rally fails, and rejection at this zone would be a logical spot, but if SPX/QQQ are leading us, IWM has potential upside of another 5%+ from here, with 220-223 matching the Keltner channels as well as our GEX-identified Dealer Cluster Zone.
IWM Chart: TradingView.com
If IWM sees a pullback from here, 205 is where we might see some support, though we don’t necessarily require that in order to attempt those higher levels close to 220+. We saw a perfect tag and rebound off of our 205 GEX Dealer Cluster Zone prior to this move higher.
IWM GEX Levels: www.geeksoffinance.com
Isn’t There Anything At All To Worry About?
I’m glad you asked. Yesterday, we discussed VIX expiration coming up this Wednesday. Well, the options market shifted somewhat, with the lower Dealer Cluster Zone shifting to 15 (a big negative cluster also exists at 16). However, the positive cluster overhead at 20 remains. Also note the light blue volume on the chart below, showing that a lot of trading occurred at the 19 strike, despite the less meaningful GEX at that area.
The only economic data point we have tomorrow is Consumer Sentiment at 10 AM ET, though that could be a source of market volatility, so we will see what happens. With the trend being higher into Thursday, it wouldn’t be surprising to see a Friday high, though we still see reasons to expect some sort of pullback between tomorrow and VIX expiration Wednesday. Let’s keep our eyes open and watch for clues from the GEX picture as well!
VIX GEX Levels: www.geeksoffinance.com
join us in our free Discord channel (or become a paying subscriber for a lot more) And we will share some real-time updates on how we see GEX shifting in the 0 DTE markets. Hopefully you’ll join us!
If you’re interested in learning more about our strategy approach, we address all of these topics in our Geek University course which is included in all memberships.
If you’re interested in accessing our tools and analytics, be sure to check out our website!
Thanks for being part of our community and know that we invite your feedback!
We have a variety of educational videos on YouTube as well!
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.
