SPX Approaches Possible Pivot into 9/11
SPX made its intraday low 13 points higher than the September 1st low, but GEX still indicates risk of a 7600 tag. Lower timeframes suggest SPX can see a bounce into Friday, which would be consistent with every year since 2014, but we keep an open mind regarding the potential for the VIX to spike toward 20. Our base case is a rebound to retest 7700+, then we can re-evaluate the odds of a larger drop versus continuation higher.
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SPX Stopped at the Weekly 9 SMA, the 15 EMA May Still be Tagged
The SPX weekly chart does a good job of showing what appears to be a bullish consolidation off of the big spike 6 weeks ago, and today’s drop stopped just above the 9 SMA, which is still bullish. We may ultimately see a tag of the 15 EMA closer to 7550, but the large GEX area at 7600 stands in the way, for now.
As SPX continued to show weakness, we now show the top 3 net GEX clusters to be 7500, 7550, then 7600. If the 15 EMA holds the current drop like it has every drop since March, we are potentially close to a meaningful short-term low, with 7700 as the initial upside target, then potentially still to 7800.
SPX 60-Minute Chart Suggests Bounce Potential, But How High?
The 60-minute chart for SPX shows price pressed down to the lower Keltner channel with the HMA also flush with the line, traditionally a situation associated with reversals. The question mark that remains rests on the uncertainty of SPX closing essentially in the middle of two big GEX clusters, the 7600 cluster and the 7650 cluster. Oftentimes, we see such middle ground resolved with the opening gap in the cash session. Since we don’t know what the night owl future traders will do, we can react to the open on Thursday with a fresh look at the 0 DTE picture, as we always do in Discord.
Two likely initial pathways exist in my mind: A spike to 7700+ immediately, or a retest of 7600, then a move toward 7650, 7700. Tomorrow may answer the question of which is first.
Key Levels: Bullish above 7650 targeting 7700, 7750. Bearish below 7650 targeting 7600, 7550.
The VIX Closed Above the Weekly 15 EMA, Increasing the Odds of a Larger Spike
Though a caveat exists- a quick loss of 16 again would suggest “not yet,” in terms of a spike toward 20. We’ve highlighted our perceived significance of VIX 16 as a pivot, which makes sense as we see the VIX close just above that line. The GEX picture suggests we might see a spike toward 17 before a reversal lower, but ultimately, we think it’s reasonable to expect some backtest or retracement before a larger downward move takes place for SPX (especially after 3 down days in a row).
Key Levels: Bullish above 16 targeting 17-20, bearish below 16 targeting 15, 14.
Lower Timeframes Suggest A Market Reprieve into September 11, VIX Drop
The VIX setup on the 60-minute chart is a tidy inverse chart to SPX’s suggestion, complementing the idea of a market bounce and a VIX backtest of lower levels. I’m watching the VIX test the upper Keltner, already crossing under the HMA, which is flush with the upper Keltner. This combination is often met with consolidation either sideways or lower before more upside. Also note the net GEX since July: GEX highs have marked VIX lows, while GEX lows have marked VIX highs. What an “easy” signal conveyed by GEX, right? And in advance. We don’t know what happens yet with this VIX high/GEX low, maybe it stretches beyond what we’ve seen recently, which is always a possibility. But if I’m going with the odds, I’m not loading up on VIX calls at this exact moment.
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