Daily Newsletter: Friday, August 16
Geek’s Daily Review: Thursday, August 15
In our free Discord channel, we had what we thought was a fairly clear gamma (GEX) setup for QQQ 472-474 range this morning, which worked out quite well. We also saw some subscribers make some “fast money” at the close as they shared their own GEX-inspired trades, which we love to see.
We took profits in a number of Educational Portfolio holdings, including WMT, NVDA, and GLD. Some of these positions appeared dead heading into expiration, which is why we aim for asymmetric risk/reward in our trade construction. Our combinations improve our odds of recovering compared to a single-leg long option trade, in many circumstances.
In today’s chart for SPX, I show a weekly candle and daily Keltner channel settings in order to show the next possible resistance point that I see. I change settings to get a feel for various possibilities and to see where overlap occurs on various timeframes, since I typically expect stronger support or resistance at overlapping points.
SPX is almost to the underside of the Hull Moving Average at 5554, an important test for markets. This second week of bright green since the early August bottom surely has destroyed more shorts and potentially sets us up for a short-term top soon, as soon as tomorrow or early next week, depending on what happens at this particular spot. A breach of 5554 may set us up for a run over 5600 before a top is in place, so we want to see if an overshoot leads to rejection or not.
We see the same conditions today that we saw yesterday as price is entering an area identified as a Dealer Cluster Zone, a nice coinciding factor with the Hull resistance. The dealer cluster box does allow for a move deeper into the box, though.
Geek's Of Finance GEX Levels Chart
SPX total GEX is approaching an extreme that has previously marked tops, since extreme GEX has more contrarian significance. Total GEX can still increase further though, so this number raises some eyebrows but it might not be the final reading.
Geek's Of Finance Historical GEX graph
We see QQQ has a little more room to reach that same Hull Moving Average resistance near 482, but the Keltner’s are still in a downtrend, so we will opportunistically be considering shorts as the move gets more extreme.
QQQ is entering a Dealer Cluster Zone as well, and a push deeper into the box corresponds well with the chart we just reviewed.
QQQ GEX is the highest it has been in some time, though it has farther to go to get as extreme as it has been in the past. This is not a requirement, but a possibility.
What Do We Expect Heading Into Friday, August 16?
It would be fitting to see another attempt higher given the recent positive momentum, especially entering a Friday.
The VIX has become too deflated too fast in our opinion, making protection cheaper than it was mere days ago. Perhaps a drop to mid-14 is in order before another spike? We’ve been saying 15-17 would be an area to watch, and it’s surprising how quickly we got there.
As usual, we will scan the market in the morning so we can make real-time decisions based on GEX positioning once the market is open. Join us in Discord for more insights!
We also invite you to check out our community discord for our latest market conversations and trade idea discussions around the more immediate picture presented by GEX.
If you’re interested in accessing to our tools and analytics, be sure to check out our website!
We have a variety of educational videos on YouTube as well! Thanks for being part of our community and know that we invite your feedback.
