VIX Expansion Just Ahead?
Last night’s newsletter addressed a possible setup for the VIX to reach 14-14.5, and Wednesday’s low was 14.77. Close, but we may still see the VIX push a bit lower. Even if we see a drop to 14, various indicators point to rising odds of a spike, even if such a spike is short-lived. SPX shows 7640 and 7800 as the two largest GEX clusters expiring Friday, and QQQ has large overhead resistance at 720.
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SPX Still Maintains A Setup To 7800 By Friday, Unclear Beyond That
As long as SPX stays above 7700, we believe odds favor a move toward 7750-7800. Negative option flow and rejection at the 9 SMA give credit toward the bearish view that we may tag 7600, but 7700 remains the key decision point in either direction. Our chart below shows gross GEX for the next two weeks, excluding Wednesday’s 0 DTE GEX, revealing a range of 7500-7800.
7800 And 7640 Are The Largest GEX CLusters Expiring Friday
The two largest net GEX clusters expiring Friday are at 7800 and 7640. These two large clusters may shift over the next two days, depending on whether or not SPX can maintain above 7700. SPX looks more bullish above 7750, bearish below 7700.
Key Levels: Bullish above 7700 targeting 7750, then 7800. Bearish below 7700 targeting 7685, 7650, 7600.
Weak Close For QQQ As 720 Looks Like A Big Pivot
QQQ was dragged down by the semiconductors, which may be a warning in and of itself. In the event that the semis continue showing weakness, we’ve been highlighting the software sector, which is thoroughly beaten up already, implying some degree of upside as the year progresses. But back to QQQ for now..We see a huge ceiling at 720, at least it’s a ceiling as long as price remains below that large area of GEX. A move beyond 720 to the upside potentially targets 730, while continuation lower may see a retest of 700. We’ll be watching every 5 points on QQQ for potential signs as to which direction is more likely.
Key Levels: Bullish above 720 targeting 730 initially. Bearish below 715 targeting 700.
Watching For A Potential Higher Low On The VIX
Last night we mentioned a retest of 14-14.5 on the VIX, and the VIX came close to the upper edge of the range today. The HMA is now rising, and GEX is not shifting lower, so we’re watching for a retest of a higher low unless we see a VIX regime shift toward lower strikes. 17-20 appear to be resistance points currently.
Key Levels: Bullish (for the VIX) above 15.60 targeting 17, then 20. Bearish below 14.95 targeting 14.30.
Imminent VIX Turn Higher Is Possible Based On Certain 2-Hour Indicators
As we close out tonight’s newsletter, let’s zoom in on the VIX 2-hour chart, which shows the %b indicator as the bottom study. Forgiving my green digital ink, you can generally see that readings above 1.0 tend to mark topping zones, while readings near or below 0.0 have marked bottoms. We’re about to enter the 0.0 territory, and the Keltner channels are now pointing higher. If the recent past has any validity regarding the future, the VIX may rebound from the 14.30-14.50 area toward the 17-20 range we’ve discussed, at which point we’ll reassess what the indices look like.
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