SPX is Biased Higher Despite Risk to 7600
We've been noting several conflicting signals: A positively skewed GEX picture, indices holding key support levels while also “stuck” below overhead resistance, and yet the VIX looks like it may spike sometime soon. One potential answer to the divergences we’re seeing is that we can see both events happen across different timeframes. Complicating the picture is uncertainty heading into NVDA earnings. Are we destined for downside first, or a tag of upside targets as high as 7900 SPX?
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SPX Closed Above the Weekly HMA, Total GEX is Mostly Between 7400-7900
Let’s start with the weekly chart and a look at the total GEX picture, minus today’s 0 DTE (we want to look ahead, not at what already happened Tuesday). SPX maintains above the HMA, though barely. The last meaningful low overshot the 50 EMA, which at this point sits at 7058, a little over 8% below the current price. The GEX picture and the price action doesn’t yet suggest that a retest of 7058 is in the cards just yet, with most GEX concentrated between 7400-7900. The largest GEX clusters (other than 7000 and 8000) are at 7600 and 7700, so we are still in the middle of a decision zone. It’s possible that NVDA may shake SPX out of its slumber in either direction, with 7800 as the initial target beyond 7700, and 7550-7600 appear likely at a loss of 7650.
SPX Net GEX Suggests a Slightly More Narrowed Range of 7550-7900
SPX net GEX for the next two weeks really brings attention to a number of strikes between 7500-7600, but 7800 is still the 2nd largest net GEX cluster, with 7600 as the largest. SPX remains below the daily HMA, which is declining rapidly. A tag of 7600 still appears likely based on the net picture. If we see a tag of 7800 following NVDA earnings, which is also near the upper Keltner channel, a reversal appears likely unless we see a big shift in GEX toward higher strikes at that point. Absent such a change in the GEX picture, a reversal is possible between 7700-7800 that may finally test 7600.
Key Levels: Bullish above 7700 targeting 7800. Bearish below 7650 targeting 7600, then 7550.
QQQ Has a GEX Setup to Reach 735
QQQ has a similar setup to SPX relative to the HMA, but QQQ has a more lopsided picture toward positive net GEX between 715-735. We know 700 is a huge gross GEX area, which is important, but we can point out that 690 is the largest negative GEX cluster, therefore even if we lose 700, downside may be limited. All factors combined seem to point toward at least a temporary upside move toward 730-740.
Key Levels: Bullish above 715 targeting 720, then 730-735. Bearish below 700 targeting 690, 680.
The VIX Might Retest 14-14.7, Downside Still Looks Limited For VOlatility
The VIX briefly retested the daily HMA this morning, printing a low of 15.13, then rebounding back above the line at 15.21. The 2-hour and 4-hour charts suggest a potential low between 14-14.7, but GEX, option activity, and the charts suggest a possible quick reversal higher, even if we do see 14-14.7.
Key Levels: Bullish (for the VIX) above 16 targeting 18, then 20. Bearish below 15.2 targeting 14.7, then 14.
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