COntrarian Reversal Signals Stacking for QQQ
While net GEX shifted more toward the negative side at Wednesday’s close, there’s a strong argument for a rebound attempt from the current area, regardless of the ultimate resolution higher or lower. The total net GEX picture for SPX shows a fairly even split across a very wide range, with the lower end reflecting 7500 and the higher end reflecting 8100. The VIX reached the upper Keltner channel on the 4-hour chart and initially rejected, and the VIX closed out the day with negative total net GEX. The remainder of the week looks foggy for now, with potential incremental downside possible, but the big picture risk reward seems to be tilted toward the upside at this point.
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SPX may still tag the 5 EMA at 7678, but the Distance from the HMA calls for Mean Reversion
Prior instances where SPX was this far above or below the HMA resulted in mean reversion, but it’s entirely possible we get another day or two of downside, even as statistically improbable as that may be. For now, it’s bullish that SPX closed the cash session with some “cushion” above 7700, and most of the GEX is between 7700-7800. I can’t count the number of times I’ve seen the market about to really break down during OpEx week when a miracle bid emerges at the most random spot to save the day while evaporating put premiums. Perhaps this time is different, but historically, this mid-week weakness may be setting up a rip higher.
-Primary scenario: SPX holds the 7678-7700 range and rallies toward 7800 into Friday’s OpEx.
-Alternative scenario: SPX gaps down, loses 7678 and heads toward 7600, the VIX rises to 20 and Cramer starts shouting “they have no idea!” on live television.
Key Levels: Bullish above 7700 targeting 7750, then 7800. Bearish below 7678 targeting 7650, 7600.
QQQ Fills September gap After Hours, GEX at 720 Might Hold for a Rebound to 740
QQQ’s steep drop has brought QQQ after hours into the low 720’s, filling the mid-September gap and testing the lower edge of the lower Dealer Cluster zone. QQQ also held above the 50-EMA after testing below the line, a potentially bullish sign. Net GEX is most concentrated in a wide band between 720-740. Net GEX at the close reached -1.4B, a level recently quite rare, and each time marked a short-term low.
-Primary scenario: QQQ holds 720 and bounces toward 740 by the end of Friday.
-Alternative scenario: QQQ completely QQQuits trying, drops toward 700-710 short-erm.
Key Levels: Bullish above 720 targeting 725, 730. Bearish below 720 targeting 710, 700.
The VIX rejects at 17, net Total GEX Turns Negative
The VIX may continue toward 20, that’s a risk we can’t ignore. The VIX tested the upper Keltner on the 4-hour chart and saw reversal from that area, also keeping the VIX below 17. The VIX moving above 17 likely raises the odds of 20, though the shift toward negative GEX today potentially means a top for the VIX is near.
-Primary scenario: The VIX retests 16, even if we ultimately see the VIX move to 20. The market rebounds from here.
-Alternative scenario: The VIX gaps up toward 19, then sells off toward 15-17.
Key Levels: Bullish above 7808 targeting 7850. Bearish below 7800 targeting 7750.
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