VIX Clings to 15 While SPX Closes Below Resistance
Our primary scenarios shared in yesterday’s newsletter mostly held up in terms of relatively shallow retests lower followed by bounces higher, but the real question becomes what comes next? Net GEX is dropping across the board, and Wednesday’s drop was relatively shallow. QQQ rebounded significantly, but at what cost? With the VIX crushed back to 15 without any incremental gain in indices, we need to consider the risk that the current drop isn’t yet completed.
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The VIX sees High Volume at 16 and 21, 15 is still Holding as Support
The VIX has seen relatively high volume at higher strikes recently, and Wednesday’s highest volume was at the 16 and 21 strikes. While failing to achieve higher highs, the VIX has maintained a series of higher lows, and at a relatively low level that has marked lows most of the year. Brief moves toward 14 have resolved higher, so a drop lower is certainly possible (specially with the HMA below 14.4) but odds favor such a drop to be temporary.
-Primary scenario: The VIX retests 17, potentially 20, before dropping to new lows for 2026.
-Alternate pathway: The VIX drops to new lows without a spike higher, Treasury Secretary Bessent throws a party while the VIX drops toward 12-13.
Key Levels: Bullish above 15.8 targeting 17, then 20. Bearish below 15 targeting 14.
SPX 7800 is a key Pivot, Wednesday’s Close 2-Points Higher Isn’t Convincing
SPX essentially retested the daily HMA, which has held as of Wednesday’s close, and 7800 remains a key GEX pivot. Lower timeframes raise some concerns about the viability of the rally intraday, with a retest of 7700 remaining as a possibility. The OpEx GEX picture still leans bullish for SPX, and a test of 7850-7900 looks probable.
-Primary scenario: SPX dips further toward 7700, then sees an OpEx “goodbye bearish premium” rally toward 7850-7900.
-Alternative scenario: SPX closes below 7700 by at least 5 points, GEX shifts negative, bulls end up in the steakhouse kitchen.
Key Levels: Bullish above 7800 targeting 7850, 7900. Bearish below 7800 targeting 7700.
QQQ sees Almost a 1B drop in GEX, 750 Appears to be key Pivot
QQQ regained the daily HMA on Wednesday, but the glaring divergence is the close well below 760 at 757.71. Net GEX was negative for much of the day as well, a big shift from Tuesday.
-Primary scenario: QQQ retests 740 and fills a gap, then rebounds toward 760-765
-Alternative scenario: QQQ Tests 765, then fades back to 755.
Key Levels: Bullish above 760 targeting 765-770. Bearish below 760 targeting 745, 740.
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