Note that we don’t say a “guarantee” of lower lows, rather a “risk” of lower lows. Tonight we’ll look at several reasons why bounces may be sold until certain GEX and technical factors appear more convincing. One primary focus is the closing net GEX reading for SPX at -1B. We see some precedent for such a reading to accompany further volatility and downward action, and net GEX suggests 7500 may come into play. Positive GEX on the VIX has been fairly sticky, and we’ve seen GEX grow at the 25 and 30 strikes. Let’s take a closer look.
Interested in getting access to our tools, trades, and our most active Discord channels? Save $300 off of the annual Portfolio Manager plan with code PUMPKIN300 at checkout!
SPX Net GEX Readings of -1B or Lower Have Seen More DOwnside Before Trend Changes
The study below our SPX chart represents daily GEX readings at the close, showing Friday’s reading at -1B. The dotted line is somewhat deceptive give the scale I chose, because a few readings that were close to -1B appear to be -1B, when in reality they were less. June 5 (I guess it would have been June 6, D-Day fittingly, if markets weren’t closed then) was the last day with a close at -1B or greater, and that reading actually preceded a steeper drop that culminated on 6/10 some 150 points lower than the close on the 5th. The last instances before that were a series of closes at -1B or greater as the March selloff culminated. Technically, SPX remains below the HMA and other moving averages, and by a considerable enough margin that a rebound toward 7700 is certainly possible, if not probable. But the largest net GEX cluster at 7500 is almost 124 points away, while 7700 is only 76 points away. So risk/reward is tilted toward the downside in terms of both GEX at the lower Keltner channel, when considering current momentum.
-Primary scenario: SPX rebound attempts above 7700 fail on a daily basis, leading to a meeting with this OpEx cycles largest net GEX cluster at 7500.
-Alternative scenario: SPX retakes 7712 on a daily close, potentially coinciding with a shift in the net GEX picture toward a more balance structure, leading to 7800.
Key Levels: Bullish above 7712 targeting 7750, 7800. Bearish below 7650 targeting 7600, 7500.
QQQ Momentum, Moving Averages, and GEX Point Lower
QQQ GEX data+Keltner channels suggest a strong possibility of tagging 690-700, and the HMA is in a steeply declining pattern, still some 15 points above the lower Keltner channel, so we could see another -2% to -3% decline.
-Primary scenario: QQQ tests 690-700, then begins a big rebound into Q4.
-Secondary Scenario: QQQ retakes 710 on a daily close, then moves toward 725.
Key Levels: Bullish above 710 targeting 720-725. Bearish below 700 targeting 690, 680.
IWM Outperforming, 285-290 mARKS A KEY UPSIDE PIVOT, 260 BELOW
While IWM has certainly not negated the recent downtrend, IWM is still technically beating other indices over the last several sessions, potentially either an indicator of a broader trend change, or noise amidst a pullback set to continue toward the IWM 260 mark. IWM retesting 285 will be the first big indicator, in our view. IWM Text Eisirs ==== SMH closes above 525 and turns the corner to the upside, targeting 590, theGM
The VIX is back in Positive GEX Territory; Noteworthy Growth in GEX at 25-30
The VIX held all of the attempts to break the trendline to the downside, maintaining the series of higher lows. The additional push past 20 today still lends credit to the potential for a spike to a new high toward 25-30, so we’re keenly watching how action unfolds on Friday.
-Primary scenario: The VIX retests 18, then potentially spikes toward 25 before plunging back toward 13-15 into year end.
-Alternative scenario: The VIX begins a downward march toward 14, then rebounds into year end as markets become even more tricky post-earnings season.
Key Levels: Bullish (for volatility) above 20 targeting 25-30. Bearish below 17 targeting 15 or lower.
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.
