VIX Divergences Building As Near-term Upside Appears Limited
NVDA was essentially the entire market today, allowing major indices to print green candles despite all other sectors appearing solidly red. While we didn’t address potential correlations between sectors over the past several days, we did address NVDA’s positive GEX at 230 and 240, with today’s high just above the 230 mark. NVDA has a shaky record of immediate continuation higher after earnings lately, and my base expectation is for some amount of consolidation before sustaining higher prices. The VIX presents some interesting divergences that point to a short-term rebound and SPX appears to have limited near-term upside.
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VIX positive GEX Steadily Rises, VIX Declines
There may be more than meets the eye with today’s apparent VIX collapse. Today’s drop brought the VIX to the lower Keltner channel on the 1 and 2 hour timeframes, and the %b (20,2) indicator is at 0.00, one of our favorite bottoming indicators, at least within several bars. Furthermore, while the VIX sometimes makes net GEX highs as the VIX spikes, I’ve circled just a few instances of the VIX dropping into a low as VIX net GEX spikes, which appears to be a good bottom signal in the instances I’ve highlighted recently. The VIX is at that point now.
Key Levels: Bullish above 15.5 targeting 18, then 20. Bearish below 14.5 targeting 14.
SPX Has a Pathway to 7800, 1-Hour Chart Suggests 7750 May be Challenging
Net GEX for Friday is actually fairly wide by normal standards, spanning 100 points from 7700-7800. The upper Keltner channel on the 1-hour chart currently aligns well with the GEX at 7750, and the HMA is rapidly approaching that upper channel, currently at 7736, so SPX appears to have a number of potential headwinds as we approach 7750. Only a move over 7750 will bring 7800 into clearer focus.
Key Levels: Bullish above 7750 targeting 7800. Bearish below 7725 targeting 7700, 7650.
QQQ Closed Above 720, But Upside May be Limited to 725-730
QQQ saw a lot of net negative option flow between 720 and 722, but the overall GEX picture looks bullish above 720, with 730-735 remaining the upside focus. The technical picture with the Keltner channels and the HMA looks challenging though, similar to SPX’s picture. A loss of 720 could easily see a GEX shift and/or a drop to 715 or lower.
Key Levels: Bullish above 720 targeting 730, 735. Bearish below 720 targeting 715, 710.
Negative GEX on IWM 295 Starting to Stick Out Like a Sore Thumb
Negative GEX on IWM is prominent at 295 for tomorrow’s expiration, and technically, IWM did close below the HMA. IWM has looked bullish for quite some time now, and it still does, but the near-term GEX picture warrants some degree of caution. Positive GEX is visible up to 305 if IWM can overtake 300-302 on Friday.
Key Levels: Bullish above 300 targeting 305-310. Bearish below 297 targeting 295, then 290.
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