Daily Preview: Thursday, July 25
END OF JULY PORTFOLIO MANAGER-TIER SUBSCRIPTION PROMOTION: $300 OFF THE ANNUAL PM SUBSCRIPTION! WE DO RUN PROMOS FROM TIME TO TIME, BUT WE ARE LIMITING THIS PROMOTION TO 5 PEOPLE. ENTER SUMMER2024 AT CHECKOUT TO RECEIVE THE DISCOUNT!
Wednesday, July 24 Review:
Markets put in a nice downside day, leading QQQ to have its largest overall pullback since October 2023. We’ve been warning of signs of an impending pullback for some time, though gamma (GEX) doesn’t always give us an exact timeframe in which to expect certain moves, so we were not pounding the table to get short by any means.
Recent calls were fulfilled for NVDA to reach the 112-115 area and QQQ 466 (we are actually below 466 by almost 1% now).
On a 0 DTE basis, GEX did a very nice job of forecasting 5450 SPX hours in advance of being hit, leading to some subscribers doing very well today. We also shared this GEX data point all over the place, for anyone who follows us on Twitter or in our free Discord channel.
While QQQ has overshot the lower Keltner channel already, the S&P is not quite there, with less than 1% more to go to reach the same point. Will markets pinpoint 5378 SPX before rebounding across the board?
SPX is just entering the green Dealer Cluster Zone where we might see a rebound, and GEX is just over -1B negative, which can become more extreme (SPY is much more negative though, at -2.7B).
SPX GEX actually hasn’t even hit the -1.4B we saw on OpEx Friday, so this is either a positive divergence or the drop isn’t over yet. Either way, it’s not an attractive spot for new short positions in our view, though going max leverage long is also not likely to be an intelligent move given what we see in front of us.
SPY at -2.7B GEX is closer to previous extremes where we’ve seen rebounds than SPX at just over -1B. While they will resolve in the same direction, we have to keep an eye on which of the two indices is proving to be the better leading indicator as we go along, as they sometimes flip-flop.
NVDA beautifully hit the 115 area we warned about a few days ago (despite our open lack of participating in the short), and it looks like 109 might be in the cards before a rebound. Interestingly, GEX is still very positive, so this move is either a trap or else we need to see capitulation from all of the faith-rich call holders who are resulting in GEX showing such a positive number.
We are entering an area where it would be understandable to see a rebound for NVDA, which surely has implications for QQQ as well. But if we are beginning a more serious downtrend, we will know by what we see during and after a rebound, allowing us to make better informed decisions about the next move.
Looking Ahead To Thursday:
Most of the remaining major earnings reports in the tech sector are next week or later, but we do have some important economic data tomorrow and Friday, so plenty of potential excuses will exist for markets to make a move. We’re quite oversold, and remember, negative GEX means that swings in BOTH directions can be amplified as dealers no longer pad volatility with counter trades, but instead buy/sell in the direction of the market. This is why bear market rebounds can be so intense.
Thanks for being part of our community and know that we invite your feedback!
Stay with us in Discord as we share real-time GEX data as we see it and we have some active subscribers also sharing what they see, including in the free channel. Thanks for reading!
