Daily Preview: Tuesday, July 16
Monday, July 15 Review:
Futures used the weekend period to levitate, but prices eventually faded to close below the upper Keltner channel (again), leaving a long wick overhead, a possible indication of eager sellers.
Note that we’re riding the top of the channel, but this can continue as long as we also hold above the Hull Moving Aveage.
Gamma (GEX) continues to be elevated, signaling a strong uptrend but also close to a potential reversal extreme again.
SPY shows its price to be hovering toward the lower side of the red target box, where we expect some sort of reversal move. GEX is positive, and 565-570 would be the top of that box, a mere 2% away.
Let’s take a glance at the historical gamma. SPX and QQQ both seems to be in downtrends with lower highs since the fist week of July. This is NOT a good sign for bulls, and that goes for both SPX and QQQ.
Now lets see where IWM stands. Or more appropiately, floats…We seem to have triggered a short squeeze, but the keltner channel is still indicating more of a sideways move. Perhaps IWM will carry the torch late in this rally and surprise many to the upside? I think it’s possible.
IWM may be headed for 220 before it heads south, so keep an eye on this. Based on the chart above and the GEX levels, IWM Seems to be very overbought though, so a fairly immediate selloff can and should ensue
IWM GEX continues to be as elevated as possible, signaling a potential move higher. Note that the current GEX highs are lower than the highs from the end of June.
What are we Looking For On Tuesday, July 16?
Tuesday morning we have retail sales reported at 8:30 AM ET, and business inventories alongside housing market index at 10 AM ET, so at least a few meaningful reports will cross the wire. We are heading into a Wednesday morning VIX expiration, so we need to be watchful for any trend change that might occur that day or potentially just after OpEx on Friday.
While extremely anecdotal, I do find it interesting that the last couple of months gave us very visible OpEx GEX targets on the indices even up to weeks before. We even wrote about these targets in the newsletter. But I have been surprised that indices seem to have gotten even more one-sided and focused on nothing but today. 0 DTE is all the rage. So what does that mean for OpEx week? First of all, it seems that players don’t have the confidence to place large, intermediate to longer term bets on higher or lower strikes. Most of the GEX is clustered around the same day expiry. We have gone over a variety of overbought metrics and very narrow breadth. These signal all favor a more bearish outlook, but we need to wait for confirmation .
Stay with us in Discord as we get the CPI number to contend with, and look for any opportunities that may pop up. We have some very skilled subscribers also sharing their trades as they incorporate GEX..It’s been fun! Thanks for reading!
