Consolidation Continues..
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NVDA didn’t quite tag the lower area I “preferred” to see around 110, but overall, we had a nice rebound from the overnight lows that took NVDA back to 124 before it failed and headed to session lows late in the afternoon. Interestingly, QQQ decided to flex its rotational muscles and started out much higher despite NVDA weakness thanks to several of the FATMAN-G names (Facebook/META, AAPL, TSLA, MSFT, AMZN, NFLX, GOOG).
Eventually, everything faded, giving up substantial gains for the indices and turning negative.
Looking at NVDA for tomorrow, it looks like $110 is still possible, we have 3 large negative gamma (GEX) clusters expiring tomorrow at $110, $115, and $116, with most positive GEX concentrated later on into September. $110 doesn’t have to happen, but it looks like we have good odds of getting close to at least those higher negative strikes that are still a couple of points lower than where we closed.
NVDA 3D Graph: www.geeksoffinance.com
We have some conflicting signals that are worth mentioning, requiring us to watch various factors closely due to the variety of pathways the market may take short term. Looking at the chart below, we are below the Hull Moving Average, which is a short signal for me, yet the consolidation we see so far off of the early August lows can potentially be argued to be bullish consolidation. Even if this is the case, I still lean toward a desire for a deeper pullback first, but just have the context in mind that this can go either way.
Using my daily Keltner settings (not shown here), we are perfectly rejecting off of the top Keltner channel. However, looking at the chart included in today’s newsletter, I show the weekly Keltner settings to show a SPY target of potentially 570 to the upside. Does anything else back up 570 as an area of possible focus?
SPY chart: TradingView.com
Let’s look at our beta version of the big website upgrade we are completing at the moment to see what SPY GEX has to say. There’s that 570 we see on the Keltner channel, marking the lower edge of a Dealer Cluster Zone overhead. Alright 570, you have my attention! We don’t necessarily have to see 570 hit, in fact we may never see it, but looking at SPY (and also SPX), I think the odds are good that somewhere in the not-too-distant future we may see an attempt to reach it.
SPY GEX Levels: Beta updated version of www.geeksoffinance.com
To include SPX in the mix briefly, I notice despite the weakness today and price closing roughly flat relative to yesterday, total GEX actually closed a little higher on the day. We consider 515M “neutral,” though it’s certainly more positive than a negative “neutral” reading and the trend is still higher with higher lows along the way.
SPX Historical GEX: www.GeeksOfFinance.com
QQQ looks quite a bit more negative to me than SPY, with GEX showing QQQ to be in a Dealer Cluster Zone where selling may occur between 470-480 and very little interest above those levels. Furthermore, the lower zone is way down at 440, yikes. Less than a 10% drop, but quite a bit further down than we’ve seen in recent times. This can shift, and perhaps the new month and expiration of NVDAs negative GEX tomorrow may impact how traders position in QQQ looking ahead as well. We can’t look at GEX as a static crystal ball peering into the future, it’s dynamic and one of several considerations we need to include in our decisions.
Beta version; QQQ GEX Levels, www.geeksoffinance.com
What Might Stimulate My Restless Leg Syndrome Tomorrow?
I metaphorically unsheathed my big yellow highlighter and started swiping away at tomorrow’s economic calendar, noting Personal Income pre-market, PMI, and Consumer Sentiment as potential algo triggers. We can certainly see a volatile end of the week, especially given how today’s market was jumping around in fairly sizable increments over short timeframes. GEX has been tricky some days recently (though not all days), but we have still been able to identify several possible intraday moves as each day goes on. Let’s keep an eye on NVDA in the morning and we will also watch for potential moves in the indices as indicated by GEX. We have some subscribers who are skilled traders who are also sharing their moves in Discord, for those who might want to watch from the comfort of their basement couch with a bag of popcorn in hand.
Economic Calendar: www.econoday.com
Check in with us in Discord, if GEX levels shift as the day progresses, we typically post what we see in our free channel!
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