SPX, QQQ Rapidly APproach Upside Targets- Is IWM Next?
Tech uniformly rallied today, giving QQQ and SPX big gains while IWM struggled. IWM saw a big decrease in negative GEX, which may be an early sign that IWM is about to join the rally crowd, even if only for moment. The VIX printed an indecision candle as VIX GEX remains stubbornly positive, so this quick move higher may not be without some drama along the pathway to new highs.
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IWM Sees Sharp Bounce in Net GEX, Time for a Rally?
IWM saw the first increase in GEX (decrease in negative GEX) since September 4. While net GEX is still negative, the quick increase in GEX brings IWM net GEX back to where it was September 8. The positive change and today’s close above 285 may signal that it’s rebound time for IWM. Rising above the 9 SMA at 286.59 could see a fast rise to 290+, even if IWM does it alone. QQQ and SPX rallied without my boy Smalls, why can’t Smalls be the spotlight? Time will tell. Given the negative trend in place, my confidence in some sort of rally doesn’t extend to the longevity of the rally, which may only be for a day in the worst-case scenario (well, other than the true worst-case scenario, which is no rally). Optimism always wins with central banks managing markets, right?
Key Levels: Bullish above 287 targeting 290-295. Bearish below 285 targeting 280-275.
SPX Approaches 7800, Risk/Reward Shifts Lower in the Near-Term
What a move for SPX, rallying all day and giving a chance for the late-morning crowd to make money long as well. Keltner divergences are a slight concern that I place low on my list, but it’s worth noting that the wider jaws visible with the upper and lower channel may imply continued volatility in both directions. We pointed out the big net positive cluster at 8000 last night, which is no longer there, but we do see a likely consolidation area between 7750-7800, right where we see SPX currently. SPX is quite far from the HMA, and price usually comes back to meet the HMA. This can happen with the HMA rising though, so the distance is not an automatic slam-dunk for bears. But given the GEX picture, it seems that odds may favor a drop to at least retest 7700, if not lower toward the 7610-7660 zone.
Key Levels: Bullish above 7775 targeting 7800. Bearish below 7750 targeting 7700, then 7660.
Major Semiconductor Stocks See Reduction in GEX Despite Monster Rallies
While we saw big rallies in some of the Mag 7, including META, the semiconductors did the heaviest lifting as a category, with big semis rallying massively. Interestingly, looking at everything from AMD to MU to NVDA, we see reductions in positive net GEX as of today’s close instead of increasing GEX. And this drop in positive GEX happened as AMD and others reached their upper Dealer Cluster zones, and AMD in particular is also stretched above the upper Keltner channel. AMD and others may see pullbacks soon, with AMD potentially targeting 550-575 on a drop back toward the HMA.
Key Levels: Bullish above 600 targeting 650. Bearish below600 targeting 550.
VIX Prints an Indecision Candle as GEX Refuses to Leave Positive Territory
The VIX (and especially VX futures) moved higher in a positive trend following the gap down opening, printing an indecision candle while still showing positive net GEX. Volatility increasingly appears to be readying for at least a backtest of the 16-17 area, though a brief drop to 14 can’t be ruled out. Downside risk appears limited for volatility at this time, though we also don’t see any signs of a massive spike coming up.
Key Levels: Bullish above 15 targeting 16-17. Limited downside below 15 targeting 14.
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