Wednesday was going great for bulls: the rally never stopped, sending bears into a global depression. And then NVDA started misbehaving after the bell (it wouldn’t be the first time for CEO Jensen…Too soon?), dragging down indices and sending VIX futures modestly higher. The drop began at a key resistance area, which should be no surprise. But where is the current drop likely to stop, and will it mark a pivot to new highs, or a continuation to new lows?
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SPX may Test 6500, the Result of Such a Test may Determine Whether bulls or BEars are the Victors
Most of SPX net GEX rests between 7500-7700. SPX is also extended above the 7470 HMA while the lower Keltner channels continue pointing lower, implying that risk/reward may be tilted toward the downside. Recent positive GEX readings for SPX have actually marked tops, so we would like to see 3+ consecutive net positive GEX closes to signal the odds may be shifting toward upside targets.
-Primary Scenario: SPX tests 7500, perhaps wicking below, then recovers to retest 7700.
-Secondary Scenario: SPX reaches 7700, then fades.
Key Levels: Bullish above 7700 targeting 7800. Bearish below 7600 targeting 7500.
QQQ 650-685 Represents Most of the GEX into OpEx
Most GEX for QQQ expiring by November’s OpEx is concentrated between 650-710. The Keltners and other indicators continue pointing lower, except the HMA, which has at least flattened out around the 665 area. The divergence of price above the HMA is reason enough to see a drop back toward the 665 zone. Risk to 640 exists as long as QQQ is below 680, though that’s not our primary view.
-Primary scenario: QQQ drops to retest 660, then rebounds toward 700.
-Secondary Scenario: QQQ test 700, then drops toward 650.
Key Levels: Bullish above 680 targeting 700. Bearish below 680 targeting 650.
NVDA Reveals Solid odds of a Bounce from 140-150
Even before Jensen’s news after hours, GEX continued to suggest risk this week for NVDA, comprising of net GEX lower at 150 and 200 in large quantity. Downside targets stretch all the way down to 140, with the current lower weekly Keltner at 143. Recent drops have stopped just shy of the lower weekly Keltner, putting the after-hours drop within range of a likely short-term low.
-Primary scenario: NVDA makes a multi-month low around 150, bouncing from that point.
-Secondary Scenario: NVDA sees a GEX shift as NVDA hangs out near lows, painting a picture of potential upside after tagging new lows.
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