SPX Closes Below 7700: Is the Pullback Over?
Monday fulfilled our initial primary scenario following Friday’s close, seeing a solid bounce with the VIX getting crushed back to the mid-18s. GEX is still positive for the VIX, and the VIX is still holding over the 16.8 level, and SPX closed below 7700, while SMH continues to show relative weakness after hours, so bulls can’t be certain that they’re out of the woods just yet.
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SPX Closed Below key Resistance on Multiple TImeframes, 7650 or Lower is Possible
SPX’s GEX picture is quite dispersed: We see modestly negative total net GEX, and the net GEX strikes are spread between 7500 and 8100. Immediate technicals and GEX pivot areas (areas of large gross GEX exposure, as opposed to large net GEX exposure, which we view as directional magnets) point toward risk of downside to 7600, yet any recapture of 7700 may lead to 7800. Looking at the total picture beyond the immediate upside and downside targets, 8000 continues to be a year-end or early 2027 target, and downside appears limited to 7500-7600.
-Primary scenario: SPX drops to 7650, then potentially begins a climb to 7800.
-Alternative scenario: SPX stages a surprising rebound all the way to 7800, then retests 7600-7650.
Key Levels: Bullish above 7700 targeting 7750, 7800. Bearish below 7790 targeting 7750, 7500.
QQQ may still tag 690-700 Unless we see a Daily Close ABove 720
QQQ faces overhead resistance at the 730 GEX cluster and 731.44 HMA, yet the Keltners still look bullish on a daily timeframe. The positive/negative net option flow at 725 and 730 highlights the significance of 730 to continued upside. Ideally, QQQ can reach the cluster of declining MAs at 740 and potentially exceed that level, though I would view any excursions as brief, given the lack of positive GEX above 740. Flow was positive however, so we’ll see what happenins in coming days.
-Primary scenario: QQQ drops toward the largest net GEX at 700, then consolidates, eventually rebounding strongly.
-Secondary Scenario: QQQ gaps up toward 740, which marks a significant hurdle, dropping toward 690.
Key Levels: Bullish above 720 targeting 740. Bearish below 700, targeting 7650
IWM Action was Rather Negative Monday, 260 is Possible, Major SHort Squeeze may be Setting up
IWM may be headed for 260, but the chart is approaching an area that might be of interest at 270, near today’s low. The weekly Keltner can be seen as a potential downside limit, in our view. Options flow continues to be negative, and total net flows were negative, suggesting participants expect lower levels to hit. A daily close above 280 seems to negate the 260 scenario, opening the door towards 290-300.
-Primary scenario: IWM tests 260 in coming days or 1-2 weeks, then rebounds toward 290.
-Alternative scenario: IWM retests 280, then continues lower toward 255-260.
Key Levels: Bullish above 280 targeting 295, 300. Bearish below 260 targeting 250-255.
Mixed SIgnals From the VIX as GEX Remains Positive, Option Flow Negative
The VIX has not negated a continuation move higher, in our view, though today’s action was a mixed bag for both bullish and bearish sides of the volatility trade. Volume was elevated at higher strikes, including VIX 30, yet cumulative net option flow showed that action to be negative (for the VIX). The VIX is also holding above the 16.80 zone that marks a possible larger breakdown, bringing our focus to VIX 18-20 on the upside
-Primary scenario: The VIX retests 16.8, then bounces to retest 20.
-Alternative scenario: The VIX gaps up to 20, continues onward to 25-30.
Key Levels: Bullish above 18 targeting 20, 25. Bearish below 16.8 targeting 15.
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