Waiting For SPX To Make Its Next Move
The muted CPI reaction amongst stock indices was accompanied by a seemingly outsized downward move in the VIX to the mid-14s. Conflicting signals this week point to a continued likelihood of SPX 7800, yet we may also still tag 7700, given that we still have two trading days left. The VIX suggests imminent reversal, even if a bounce in volatility doesn’t make it very far to the upside.
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SPX Still Shows Favorable Odds Of Tagging 7800 Based On GEX
7800 is still the largest net GEX cluster on the map, at least when we filter the selection to only show this week’s GEX. While my opinion is that SPX crossing over the HMA leans bearish, the HMA is still rising, so a retest of the line from below could easily put us at or just above 7800, even if the move doesn’t last long. On the flip side, we may see 7700 first, especially given the close below 7750 and below the HMA and the negative option flow we see today.
Key Levels: Bullish above 7750 targeting 7800. Bearish below 7750 targeting 7700, then 7670, same as yesterday (and the day before).
Watching For QQQ 730 To Be Reached By Friday
QQQ may be heading for 730, though we see limited upside this week based on the GEX picture. QQQ did look more bullish than SPX today, largely thanks to the semiconductors. Flow was positive and QQQ still hasn’t closed well below the HMA. The large negative GEX at 715 gets my attention to the downside, but QQQ is currently above the GEX level at 720, so we don’t see immediate signs of dramatic weakness at the moment.
Key Levels: Bullish above 720 targeting 730-740. Bearish below 720 targeting 715, 710.
The VIX Reaches Extreme Downside Targets- Reversal Imminent
The VIX reached oversold levels today based on a number of metrics: We see the %b (20,2) indicator at 0.00, the VIX at the bottom of the 1-hour and 2-hour Keltner channels, the HMA about to cross under the VIX at that lower Keltner channel, and a new recent low. The GEX picture suggests downside is limited from here for volatility, and it’s possible we at least see a spike toward 16 if not higher in coming days. I think the 1-hour chart below reflects imminent risk of a VIX reversal, but we’ll see what Thursday brings.
Key Levels: Bullish above 14.85 targeting 15.5, then 16, then 18-20. Bearish below 14.4 targeting 14, likely any deeper drop would be intraday and very temporary based on GEX.
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