Daily Preview: Friday, July 26
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Thursday, July 25 Review:
Yesterday, we asked “Will markets pinpoint 5378 SPX before rebounding across the board?: We didn’t quite make it, but today’s low of 5390 was pretty close, though new information may lead us to expect more downside prior to a bigger bounce.
Regardless, forecasting in advance is difficult, whether a day or a year, but we’ve been really pleased with the actionable nature of gamma (GEX) signals on an intraday basis. We posted the chart for QQQ 2 minutes before a blistering rally ensued from the 455.63 low, showing an unusually concentrated 465 cluster in the midst of what had been daunting downside all morning leading up to that time.
Even with intraday trades, GEX doesn’t tell us when something will happen, we are simply trying to position for what we see as the highest probability outcome while allowing enough time for it to happen, which is guesswork (to a point).
All we can say with intraday GEX is that by the close, at that particular time, 465 stood out as a strike of interest for QQQ. But look at how that worked out..We climbed all the way back to 467.94 before fading again. Negative GEX means wider swings in BOTH directions.
The daily candle for both SPX and QQQ looks bearish, with a long wick overhead, signaling potentially eager sellers in the face of a rebound attempt. But this is only one factor to consider.
We are still oversold after many days of mostly declining prices, and we rest below the lower Keltner channel, a situation not typically sustained for too long. This can be resolved by either price moving up, the Keltners moving lower, Keltners moving higher and price eventually reacting, or some combination of those, just to state what might be obvious to some.
Yesterday, we said NVDA might tag 109 before a rebound occurs, and today’s low was 106, a price level probably unfathomable to feverish bulls mere days or weeks ago.
Considering GEX levels, NVDA rebounded where we wanted it to, stopping below the green Dealer Cluster Zone and bouncing significantly intraday.
GEX is still positive overall for NVDA, but it is less so than a few days ago, and we see large negative clusters for tomorrow. That said, the negative clusters aren’t lower than 110, yet we have sizable positive clusters at 118 and 120. Given how much NVDA can move in a short timeframe, we need to be aware of the risks to the upside here in the face of recent downside.
It’s possible that SPX may decline to the mid 5300s before bouncing in a more sustained way, at least as far as the Keltners are concerned.
GEX Dealer Cluster levels between 5300-5400 fit well with the theoretical Keltner target of 5367 as well. Look at the volume at 5500 SPX today, which can mean a number of things. Interesting that 5500 also matches the zero GEX line..Possible rebound target?
GEX moved lower yet again, -1.23B for SPX, clearly in negative territory, though still higher than the earlier low last Friday.
Looking Ahead To Friday:
We don’t see a lot on the calendar for tomorrow, but Econoday gives us Personal Income and Consumer Sentiment as the likely two most important releases. It’s Friday too, and we closed near a low last Friday, so do we have a repeat? I would be cautious counting on that, but that’s just a guess.
We see oversold conditions, but negative total GEX, so any rebound should be viewed skeptically. Join us in Discord and we’ll keep sharing intraday GEX when we see anything noteworthy.
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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!
