Rally Back to Neutral for OpEx Week?

SPX started the cash session below the daily HMA on my chart, but the close was much closer, essentially a coin flip in terms of predictive power. SPX still holds above the big 7800 GEX cluster, keeping alive immediate bullish potential. QQQ reached 740, even dropping a little lower to 738.8 before rebounding. The VIX closed above the daily HMA for the first time in 2 weeks while GEX moved even more positive for the VIX, a possible precursor to a spike, though the current total picture suggests that the market will move higher into year end, even if we see a pullback. Perhaps CPI in the morning can give us a dip to buy for a bullish end to the week? We’ll see.

Interested in getting access to our tools and most active Discord channels? Save $300 off of the annual Portfolio Manager plan with code PUMPKIN300 at checkout!

SMH and the AI Stocks are Getting a bit Stretched to the Downside

Here’s some perspective for you: Everyone has been talking about how AI stocks have been leading the market, yet AI stocks (at least as far as SMH represents a lot of them) touched prices today seen in May. That’s 5 months ago, for those unfamiliar with the calendar. Guess what is higher since May? The S&P. Maybe I’m the only one who finds that to be pretty surprising given the narratives out there, and obviously you can find individual stock charts that look parabolic over that same timeframe.

SMH is quite far extended below the HMA, also sitting within our lower Dealer Cluster zone, a bounce could materialize from this spot, potentially targeting 600 initially, though 610-615 could come into play if SMH can close above 600 again. SMH and QQQ are both in negative GEX territory, though many of the Mag Seven have strongly positive GEX, so we’ll watch action across the tech space with interest as we enter the back half of the week.

-Primary scenario: SMH rebounds to 600, consolidates, then moves toward 610.

-Alternative scenario: SMH drops toward 570, then rebounds to 590, potentially reversing lower between 590-600.

Key Levels: Bullish above 590 targeting 600, then 610. Bearish below 588 targeting 570.

QQQ can still see 760, Mag 7 and Some Help from AI can get the job Done

QQQ’s chart recently looks a lot like SMH, but the Mag Seven stocks combined with an oversold rebound for SMH could create quite the squeeze. QQQ needs to overcome the immediate 15 EMA resistance at 744.22 to open the doors to 750 and potentially 760, both of which show meaningful positive GEX. Today’s close above 740 appears to be a positive, given the large GEX at 740 that could expectedly act as an important pivot.

-Primary scenario: QQQ continues higher toward 760 by OpEx Friday.

-Alternative scenario: QQQ tests 750, fails, ends up below 740 as it heads for 730.

Key Levels: Bullish above 744 targeting 750, 760. Bearish below 740 targeting 730, 720.

SPX Closes Below the Daily HMA; still Above GEX at 7800

In summary so far, we’ve looked at SMH and QQQ and their likelihood of making up some lost ground, even if the destination isn’t a new all-time high. SPX has seen GEX diminish somewhat at 8000 for this week, though GEX has grown (relatively speaking) at 7875. Signs point toward SPX tightening up its likely range as “operation OpEx premium kill” takes hold. GEX at 7750 has also grown. If we can see SPX lose the 7800 GEX zone, we may see 7750 fairly quickly, though tagging that area likely represents another dip buy (sorry bears).

-Primary scenario: SPX rallies toward 7850, even if we see premarket weakness.

-Alternative scenario: SPX loses 7800, drops toward 7750, 7700.

Key Levels: Bullish above 7808 targeting 7850. Bearish below 7800 targeting 7750.

The VIX sees Positive GEX Increasing Again, Closes Above the HMA

The VIX had its first close above the daily HMA after being below the HMA since 9/28, and GEX moved more positively. These signals are concerning for the market, at least in terms of the longevity of any upside attempt. The VIX is near the 15 GEX cluster expiring on VIX expiration 10/21, so unless GEX shifts, the VIX may shift higher between now and a week from now. I’ve been saying the VIX could reach 14-14.5 short-term and I still think that’s true, maybe even tomorrow. A move lower that holds may set up the next VIX spike, at least from a contrarian perspective.

-Primary scenario: The VIX drops to 14-14.5, then bounces.

-Alternative scenario: VIX opens above 16, continues to 20.

Join The Discussion

Non-subscribers can join our great Discord community with all of its experienced traders by clicking Community on our homepage. First-time guests get a free 7-day trial of the premium Discord channels, where we talk through what is happening in real time.

Our YouTube videos can be viewed by clicking Community at the top of our homepage to find the channel link. We posted a new YouTube video tonight discussing major indices as well as some individual stocks, so check it out!

Join our livestream by clicking the link on our homepage every day around 10:30am ET, and you can replay the most recent one any time before the next one begins. We also post a link in Discord when we’re ready to start.

We now have a live demo on our homepage for those who want to explore the main sections of our website, so we invite non-members to check it out!

Thanks for being part of our community and know that we invite and appreciate your feedback!

The information provided by Geeks of Finance LLC is for educational purposes only and is not intended to be, nor should be construed as, an offer, recommendation or solicitation to buy or sell any security or instrument or to participate in any transaction or activity. Please view our Investment Adviser Disclaimer and Risk Disclosure.