Daily Preview: Tuesday, July 23
Monday, July 22 Review:
We’ve been careful to give both sides of the argument regarding what we think might happen next for the market, which seems prudent given the range of possible outcomes and uncertainties. We cautioned yesterday that we might continue lower, but conditions were oversold, so a bounce could happen at any time.
We gapped up today and we saw at least some sort of bounce, though it certainly wasn’t the biggest one-day rebound we’ve ever seen after such a route over the last few days.
QQQ hasn’t even made it back to retest the middle Keltner channel from below, it is still 1% away.
Gamma (GEX) also rebounded today, considerably from the -1B we saw after Friday’s close, but it’s still technically negative, within the range we consider neutral, though. Will we see GEX swing back to marginally positive territory, which has characterized QQQ during much of the rally since April, or will we dive back into deep negative territory and begin a more sizable correction?
IWM (and DIA) pulled the opposite move as SPY and QQQ started dropping over a week ago, rising in the face of the latter dropping.
IWM tested the red Dealer Cluster Zone and also went quite far above the upper Keltner channel, then started declining. Is this rebound going to see 225-230 again or do we head south to 205-206 first?
I am inclined to be cautious because we are still above the upper Keltner channel, yet we are struggling at the Hull Moving Average from below, so tomorrow should seal the short-term fate of whether we see more of a drop first or not. It’s unusual to stay elevated this far above the Keltners for long.
We also gave NVDA a confidence inspiring 50/50 shot at rising or dropping from Friday’s close, and we saw a rise alongside QQQ today. NVDA is already almost to the Hull Moving Average, which is the first of two potential resistance areas coming up very soon. This will be an important test (and maybe an omen) for whether or not QQQ itself can muster more of a rally from here or not. We lean toward the downside target on NVDA, but we won’t be placing it in the Educational Portfolio any time soon due to our other exposure, including some short positions and a long in PANW.
Looking Ahead To Tuesday:
In the background, we have an unusual concoction of potential Black Swan events politically, and we have earnings this week, so know that now more than any time recently, the unexpected can happen.
The VIX dropped fairly close to the mid-14 area where it can stage a rebound, and the upper Keltner on the VIX is pointing up now. But earnings season could see a bounce first, it’s hard to say. Tomorrow, we will be watching UPS, KO, and GM in the morning, and the first big tech reports come after the close: GOOG and TSLA. Prepare for volatility!
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