Geek’s daily newsletter
Special Promotion- Independence Day $300 Off!
We’re down to 1 remaining annual subscriptions to interested Portfolio Manager Tier subscribers at a deeply discounted $300 off! Enter promo code (all caps) INDEPENDENCE24 at checkout to lock in this limited time deal! We are in the midst of a MAJOR overhaul and expansion of our dashboard and so we’re looking to hasten the improvement for everyone’s sake! Check out the comments in Discord, you’ll see what our existing subscribers have to say! Expires 11:59PM July 4!
New Site Updates:
Before we jump into a brief look at markets, we want to show you yet another helpful set of tools we’ve added that will help our Portfolio Manager-tier members. We will also be able to share this from time to time with those of you in the general audience who are considering a subscription down the road, or those who simply enjoy lurking while receiving the occasional freebie. No judgment here!
The first thing you’ll notice below the gamma-related information on the GEX Dashboard Levels page is our open portfolio positions that we hold in our Educational Portfolio. We know it’s helpful to watch how we manage positions, and this will make it easier in case you’re having trouble finding where we mentioned buying or selling a position in our Trade Ideas or Portfolio Manager Chat channels in Discord. And So far, looking good overall, even with a period of consolidation experienced recently. Here’s a real snapshot from today:
The next item is also Educational Portfolio-related, a weekly tracker so you can see our performance. For context, we run a $10,000 portfolio with each position typically resulting in 2-3% at risk, though sometimes we go higher, to the 6-7% range. After a temporary dip and some sideways action, we’ve seen a rebound to reflect a current net gain of 76% since February. We have MAJOR changes in the works that we hope you all find to be helpful and intuitive, and we’ll be sure to announce when the updates are completed!
Tuesday, July 2 Review:
Powell ignited a rally today (act surprised!), sending SPX/SPY and QQQ to highs of the day into the close.
Don’t worry, I always have a contrarian bucket of cold or hot water nearby to keep you from getting too excited.
For instance, QQQ’s high of day and closing price was .22 below the high of 6/28. So a lower high. SPX was roughly 14 points below the high on 6/28. SPX also stopped at a very logical stopping point: The daily Hull Moving Average. The rule-of-thumb I typically follow when deriving a conclusion from the Hull is to have a long bias above the line, and a short bias below the line. QQQ did close above the line, so perhaps the upper Keltner channel becomes the target, around 488.
Prices can easily (though temporarily) extend above or below those guideposts, so we still like to consult with our gamma (GEX) data before drawing up a trading plan. Here you can see how SPX made a lower high, stopping right at the Hull, almost exactly:
We also see SPX reaching the red Dealer Cluster again, the current general area that GEX signals as being a place where dealers might become sellers. Combine with reaching the Hull Moving Average, we definitely see reason for caution, and there’s more.
To help propel SPX to today’s highs, GEX was almost boosted to an extreme, and too much of anything is bad for you…Or at least in the case of GEX, too much (or too little) can fuel quick reversals in the opposite direction. We aren’t quite “there” in terms of reaching the 2-2.4B area where we topped out the last two times recently, but 1.75B is close. We also have the implied volatility-related tool we created (GEX-Weighted Volatility Gauge) signaling a slight uptick in expected volatility. While early, this may mean we will see more volatility in the future, if the gauge continues increasing.
Lastly, the VIX (despite the effort to really crush it down today) is still finding support in the 12 area, a trendline that goes back a long way. Can we see the VIX rise, and markets rise? Sure, it’s technically possible and it does happen from time to time, but I can’t recall a market this narrow, either. We’re down not just to a handful of stocks, but 1-2 stocks being really pumped up and then rotated each day to keep the carousel going. Very interesting to watch, and there’s really no way to predict how long it lasts.
The chart below shows the VIX in a large GEX Dealer Cluster Zone, and the light blue to the far right shows option volume today at higher strikes.
What are we looking for heading into Wednesday?
Tomorrow has a massive list of data points, which perhaps explains the wall into the close to the upside today (stop out the shorts before some selling pressure? At least that’s one possibility). I ignore the “bond announcements,” but we have one bond auction, ADP, job cuts report, jobless claims, ISM, PMI, and FOMC minutes. And, somewhat comically, markets close at 1PM ET, but the FOMC minutes don’t come out until 2PM ET. So if you buy calls or puts, you can wait until Friday to see if you made or lost money on the reaction, at least in the absence of anything surprising happening on July 4 (please no surprises).
