QQQ May Gap Up, Then What?
NVDA reported after market close Wednesday, initially moving lower before rebounding to a positive outcome entering the overnight session. The initial move higher is in line with what we’ve observed as we looked at NVDA, so no surprise there. The bigger question now is what happens during Thursday’s cash session? Can the lovefest continue, or will the contrarian signals from a low VIX play out for a cash session reversal?
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Watching Reaction At SPX 7750 if Upside Holds Into Thursday
Futures indicate an initial positive move for indices, and if that move holds, tomorrow will see SPX in a more bullish position above the daily HMA, 9 SMA, and 15 EMA. We may also see SPX back above 7700, which opens the door to a move toward 7750. 7800 is currently the largest GEX area above 7700 other than the 8000 strike, so reaching 7800 would be an important test, if we get there. I don’t like that the upper Keltner channel is flat and roughly equal to the 7850 GEX that is visible. SPX may see reversal between 7750-7850, so we want to watch for shifts in GEX, price action, and the VIX to help our decision process when and if we get there. 7500 and 7600 still look significant as of Wednesday’s close, even compared to 7800.
Key Levels: Bullish above 7700 targeting 7750, 7800 initially. Bearish below 7700 targeting 7650, 7600.
QQQ May be Headed for 730 or Higher
QQQ still favors bullish targets as long as it holds above 700, and NVDA may help to push QQQ toward 730-735 above 720. QQQ is still in the upper Dealer Cluster zone and the moving averages are still diving, so we’re cautious regarding the longevity of this move without a larger pullback. But we’ll take it one step at a time, and it’s good to see NVDA tagging higher targets as we’ve highlighted as the most likely scenario in our speculative view heading into their earnings that were just released.
Key Levels: Bullish above 700 targeting 720, 730-735. Bearish below 700 targeting 690, 680.
IWM Upside Targets are Still 305 and 310
IWM has been pretty tight lately, and GEX being negative isn’t necessarily a sign that IWM will break down. IWM has spent a lot of the last few years in negative GEX territory, which sometimes seems more contrarian for IWM. Retaking 300 opens the door to 305-310, staying below 300 should lead to 295-290 in our view.
Key Levels: Bullish above 300 targeting 305, 310. Bearish below 300 targeting 295, 290 initially.
The VIX is Already At Contrarian Negative Extremes, May Reverse Higher From 14
I view the VIX as a potential problem for the markets at this immediate juncture. While the VIX might stay within a 14-16 range for some time, which would be bullish, certain factors currently favor a spike of some sort soon, even if it’s short lived. I’ve underlined a pattern we’ve seen over the last few days: The VIX gaps up, then consolidates, then another gap up. These moves are printing higher lows and higher highs, and the %b indicator (the bottom study) is at the doorstep of 0.00, a good buy signal for the VIX in my view. The %b can get more oversold, and the VIX may temporarily break the pattern of higher lows and drop down to retest the 14.5 area. At this point, I expect either the VIX to climb with the market or potentially the VIX to climb as the market reverses lower. Let’s wait and see what tomorrow’s 0 DTE picture says and we will share a little more than usual in Discord, so join us there!
Key Levels: Bullish (for the VIX) above 16 targeting 17-18, then 20. Bearish below 15.2 targeting 14.7, then 14.5
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