Running Out The Clock
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Check out out latest YouTube video that we posted today (click here to watch), where we discuss some of the things we’re watching with the markets, the VIX, and a recent opportunity identified with SBUX (I have LOTS of caffeine jokes just waiting to be used).
Intraday, SPX was flashing a little ankle at 5750, which also happens to be the largest gamma (GEX) cluster in the picture right now (see graph below). SPX reached 5741 for the intraday high before fading. IWM dropped like a rock, and QQQ was the darling of the day.
Looking at the 3D chart from our website, we see 5750 still towering over the playing field as the largest GEX cluster, with 9/30 as the expiry. We need to keep watch of this as we approach Monday, because there’s no requirement that traders maintain this positioning the entire time, and there’s also no requirement that we reach the exact price. 5741 is VERY close, though I would definitely prefer to see us reach just a little closer (or even exceeding) that 5750 before the next directional move.
SPX 3D GEX: www.geeksoffinance.com
SPX’s chart closed with a somewhat bearish development in that we are now below the Hull Moving Average. I don’t like to be long below the Hull. We have some conflicting data we will review, so don’t get out your Halloween bear costume just yet. To start with, we still have bullish Keltner channels, angled upward at a fairly sharp angle, so even a continued decline might only make it about 2% lower (2% sounds smaller than 100 points, given our lofty starting point for evaluation).
On the positive side, SPX GEX is still holding over 1B, so we give the edge toward the bullish side. But the trend is lower, so we need to consider other factors combined with GEX as we attempt to judge the next most likely move.
Let’s briefly look at QQQ, which actually looks more bullish than SPX, at least as far as holding above the Hull and painting a green candle. Perhaps QQQ is signaling that we will in fact attempt higher prices into Friday or possibly Monday? MU (semiconductor sector) is up in a big way after hours, trading at $110, so it wouldn’t be surprising to see QQQ follow suit at least during the cash session tomorrow, if the after hours gain lasts.
QQQ GEX remains positive, but it’s also lower than the recent peak. I put less faith in QQQ GEX this year unless it’s truly an extreme (or intraday only), because it’s appeared fairly neutral for much of the year, yet look at YTD performance for QQQ. But we can still observe some tendencies around GEX extremes and market high/low points.
QQQ Historical GEX: www.geeksoffinance.com
We revisited IWM yesterday, and thus we were punished today with a big red candle in IWM. That said, one man’s punishment is another man’s shopping spree, and buyers may start to look more closely IF the rest of the market is looking higher over the next few days. IWM Is almost to the $216 middle Keltner channel, and we can draw a trendline back to the August low that hypothetically implies SOME sort of bounce in this general area.
Our GEX levels chart also shows that IWM is basically still consolidating around the zero GEX line, and 230 is a big GEX cluster overhead. The more cautious view would note the GEX at the 210 area, with some volume in that zone as well. With a fairly positive showing this quarter, I don’t see any Wall Street incentive (particularly for those with a small cap focus) to dump the sector or replace it with tech, so combined with the previously mentioned factors, we still see the possibility of some upside volatility into quarter end after this shakeout is completed.
IWM GEX Levels: www.geeksoffinance.com
All-in-all, we won’t be looking for too large of a deviation away from 5750 until we see 5750 GEX drop off or higher/lower GEX strikes take the lead in terms of the market’s positioning. Drops might be good long scalps to buy, rallies might be good short scalps, if they get too far above 5750, at least in theory. Quarter end can be difficult to trade, similar to OpEx. We hope you’ll join us in Discord where we have a great group of good traders sharing their trades, and we also do our fair share to post intraday developments as we see them, which has helped us to quickly adjust to what appears to be the correct side of the trade many times recently. Thanks for reading!
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