Welcome To The Pre-FOMC Chop!
Today’s gap up faded, closing the gap from Friday and once again consolidating not far from the 50 EMA. Importantly, SPX still holds above 7400, an important battleground. The VIX and net GEX suggests SPX may not hold 7400 the entire week, with 7300 looking like a potential magnet, but we note the potential for more “chop” as participants place bets ahead of FOMC. Testing upside resistance and lower support would not be surprising for FOMC week, especially in light of the earnings reports later this week.
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SPX’s Total GEX Picture Shows Negative Flow, Most GEX Between 7300-7600
Total flow today (at the bottom right, which members can expand on the website for more info) was negative, and a look at the Cumulative Net Flow graph shows very little positive flow at most strikes, except the curious positive action at 6000 and 7000, levels we’re not entertaining at this exact moment. Technically, the important areas on the chart tend to align quite well with large GEX clusters, including the 15 EMA and 9 SMA at 7345 and 7448 respectively, with the lower Dealer Cluster zone at the 7300 level.
SPX Net GEX Still Points To 7300, Not Much Net GEX Above 7400 This Week
The absolute net GEX shown on the chart below displays this week only, showing a lower range (7200-7400) than the 7300-7600 range suggested by the gross GEX picture. We mentally overlay net and gross pictures to keep in mind the support/resistance areas shown by the gross picture while noting the largest potential price magnets shown on the net picture. We may soon be due for a bounce back toward the 7470-7500 area if SPX can retake the HMA at 7449, and FOMC might be a good excuse for some “shake and bake” action in both directions. The current picture points to a potential dip buy at 7300 and a potential selling opportunity at 7470-7500.
Key levels: Bullish above 7450 targeting 7470-7500. Bearish below 7400 targeting 7350, 7300.
QQQ: GEX Growing At Lower Strikes, Bounce Back To 690-700 Still Possible
On the one hand, QQQ held 680, which is a positive. 690-700 may be rebound targets on a move over 685, but the negative GEX at 650, 660, and 670 continue to appear as high odds targets, eventually. Cumulative net flow was negative at the 700 strike, but total net flow was positive, contrasting with what we saw with SPX today., though in line with what we saw when we isolated activity this week for SPX. We will await more information and react to extremes being reached as well as the 0 DTE GEX picture after tomorrow’s open.
Key Levels: Bullish above 685 targeting 690, 700. Bearish below 680 targeting 670, 660.
QQQ’s Daily Picture Shows Negative Momentum
QQQ’s negative momentum may end with a climactic short-term bottom, so we’ll be watching what happens as QQQ makes its way to 650-670. Will we see more downside before or after a retest of 690-700? Flow seems to lean toward a bounce first, but the night crew is not celebrating so far.
The VIX Shows Positive Momentum, Holding Above Key Levels
The VIX shows consistent positive flow day in and day out for the last week, and we saw GEX grow at 25 and 30. The HMA and various moving averages are pointing higher and the VIX is holding above key support levels to keep the trend going. From a GEX perspective, we see a wall of positive and negative GEX at 20, so this needs to be overtaken to see 25. Repeat attempts to break through may imply ultimate success by bears to capture 20, opening the door to those higher levels.
Key Levels: VIX is bullish above 17 targeting 20, 25. Bearish below 17 targeting 15-16.
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