Geek’s Daily Preview: Thursday, August 1
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Well, actual volatility today ended up being fairly close to what we saw implied in yesterday’s options market, despite our view that we could see a larger move. In defense of what we were seeing, we did gap up from yesterday’s close, actually given us a 2% difference between today’s high and Tuesday’s close. To revive yesterday’s analogy (due to my lack of imagination as the evening progresses), we didn’t quite make it to the international space station, but the rocket at least made it to the edge of the atmosphere before coming in for a rough (yet not TOO rough) landing. Good thing the craft was unmanned, except for a chimp and a small kitten with nine lives. Neither creature were harmed.
Notice that SPY is respecting lines on my chart, breaching the middle Keltner before closing just under it. I’ll be watching the Hull Moving Average at 544 below, and exceeding 551 or 553 to get more bullish, tactically short term.
Chart credit: Tradingview.com
SPY GEX is still negative, but not by much, so we will call it neutral. SPX and QQQ have modest positive GEX, also in the neutral range. Last time SPY GEX reached this approximate point and attempted to hold above the zero line, GEX failed, dropping to a more negative level. Will we see the same this time, or can we build on the progress and turn more positive? SPX 5600 and 5700 are clustered around the mid-August timeframe, but we also highlighted a 5200 cluster for August 16 in Discord as well.
SPX GEX Levels 7-29-24
QQQ has been the weakest performer, and today’s green candle was impressive, but there’s a lot of work to do. Looking at the same technical indicators, I’d consider it bullish to hold above 461, and 482 overhead will be an important resistance point to watch. Given the closer proximity of resistance areas for QQQ, I’ll be watching what happens here with greater weight than what I see with SPX, personally. In other words, QQQ 482 may imply SPY/SPX also rallies, but perhaps that rally can end at some in-between spot not clearly defined, if someone has blinders on and only watches that one index. Fortunately, to bring it back to our primary focus, we can improve our odds by considering where GEX sits at the time (positive or negative) and we can draw some conclusions from where we see large positive or negative clusters.
If you wipe today’s expiration off the map, which won’t really happen on our chart until overnight/early morning, this negative GEX at 440 is actually quite formidable. It doesn’t look large on the 3D chart, so I looked more closely, and those 440 expiries are scattered all across the spectrum from August 1st (tomorrow) to August 16. I know of some theoretical projections for weakness into mid-August, and if those guesses end up being true, these negative expiries start to make sense. But we will have to watch the GEX picture in coming days to see if the forward view seems to validate or shift this picture.
A balanced view of any sort of rally into the election might include allowance for weakness to continue in the short term to work off more bullishness and increase put buying, providing the necessary fuel for a move into (or close to) the election, in theory. Even if this does play out, no telling how choppy it might get between here and some solid low point.
Conclusion: I can tell you possibilities all night long, but the reality is that none of us know. Sorry, no refunds, but I do have a Geek’s Book Of Wisdom on sale as an E-book (digital paperback only) where you can find this and many other great sayings designed to lift your spirits in dark times, or make yourself seem very interesting at your next LAN party in between games of Everquest (do geeks still do those things?).
IWM made a run for 230, which was spectacular, falling just shy of 229 for the high today. The Keltners are pointing up at a sharp angle, which is bullish, but I was entertaining the idea of 212 or so first, but instead we saw the run higher and the rejection over the Hull Moving Average to create a big John Wick candle for the day. I still like the idea of a pullback for those wishing they were long and trying to fight the FOMO. I personally would only be interested in scalping short with this chart, no interest on my end to go for a heroic buy-and-hold short at this time.
The chart below shows the volume today at 230, the GEX cluster is still there as well, though the Dealer Cluster Zones certainly lend credit to the idea of potentially waiting for a drop into the green box before buying.
What Are We Looking For Post-Fed, August 1st?
Now that Powell read us his sweet nothings, back to earnings, with reactions in the morning to META and a few semiconductor stocks, plus ConocoPhillips might see some action for the energy sector.
The biggest news tomorrow on the earnings front will be AMZN and AAPL, likely to overshadow the other reports I highlighted in yellow on this Earnings Whispers chart. Quite a bit to digest this week!
On top of earnings we get the usual Jobless Claims report in the morning, and PMI/ISM data later in the morning, plus a couple of bond auctions. Seems like tomorrow and Friday this week might be as interesting as today’s FOMC announcement, really. Join us on Discord for the discussion!
