Merely two days ago, we pointed to SPX 5639 as a possible target based on a remaining gap that was yet to be filled, sure enough, today’s high (when SPX was still defying gravity) was actually 5643. Pretty close!
The breach of that upper Keltner channel was rejected and SPX is headed for a meeting with the Hull Moving Average below (5550 area). The Hull will potentially increase tonight, given the steep trajectory, so I’m not sure where it will be in the morning. Oftentimes, in a steep uptrend that has started to consolidate, we see the Hull surpass the price which creates a situation that starts looking more bearish, with price beneath the Hull. Something to watch..I tend to lean short below the Hull.

The hot map- I mean heat map- shows the Magnificent Seven became the Malignant Seven, if only for a day. The rotation machine tried to keep Bertha floating at the surface of the pool, but defensive names weren’t enough to keep it green.

SPX GEX dropped into neutral territory from solid positive territory, so this is in fact a meaningful shift with possible implications down the road, no exact timeframe specified. But we need to see GEX below 1 billion to increase odds of more downside ahead.

We’re entering a Friday during a positive week, even after today’s route. Can we get super bearish just yet? I am cautious, but not committed in either direction. Shifts in trend can be dangerous in both directions as the two sides (or three, if we want to count those annoying Neutralphiles) battle it out. Look at the SPX GEX levels below: We’re already entering a dealer cluster area that may see a rebound attempt.

QQQ looks more bearish, at least for now, having dropped to a lower GEX level than SPX, a fairly stark shift from just a few days ago.

A lot of QQQ’s negative GEX was focused on today’s expiration. Does a Powell Pump loom out in the ether (picture Matthew McConoughey swirling his hand out to the side) with most of tomorrow’s expiring GEX clustered on the positive side? 485 seems realistic without considering anything else…2%+ moves happen regularly in tech town.

IWM continues frustrating everyone, dropping a little after appearing to be poised for higher yesterday, yet stopping right at the middle Keltner channel.

IWM GEX did move more negative, so we’ll see if this drop impacts tomorrow’s price action. GEX becoming more negative in total doesn’t give us an exact time to get short, it simply tells us to lean bearish or lean bullish (or neutral) for a general timeframe.

I’m afraid…Very afraid. Afraid of what? Fear itself? Nope, and I’ve actually heard that Fear is actually afraid of Chuck Norris, by the way. But seriously, with Powell speaking tomorrow at 10 AM ET, and new home sales beforehand, it’s not the time to be dreaming of puts and counting investing sheep, we must stay nimble and prepared for the risk of surprises in both or either direction.
Remember- we’ve dropped going into Powell’s speech tomorrow, volatility is up, yet we are still positive on the week. A positive week can certainly end negative, but we have some probabilistic tendency toward a positive outcome as well. Regardless, saying “the market can go up or down” may not in and of itself be very useful, but I cannot have confidence that today’s drop means tomorrow is a slam dunk continuation lower.
Today’s tricky GEX reading still ended up eventually pulling us to the correct side of the equation, so we will review real-time information as tomorrow goes on to try and end the week with another win.

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Daily Preview: Friday, August 23

Massive Reversal: Risk-On Or Recession?