SPX Closes Above 7700 Every Day This Week- What’s Next?
SPX appears to be in process of fulfilling what we listed yesterday as our “Scenario 2,” tagging 7660-7675 and rebounding toward 7750, though only reaching 7719 as of Thursday. The close above 7700 and above the key cluster of moving averages on my chart looks bullish, at least in the short run. The VIX begrudgingly reached 16, but a larger VIX spike may still happen. Tonight we look at GEX going into next week and what might happen from here.
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SPX ENriches Options Sellers, 7800 Still in the Crosshairs
Active traders likely felt a lot more emotion this week than the closes would indicate, with SPX closing above 7700 every day this week. Today’s tag of 7662 produced an anticipated bounce, and 7800 remains the largest net GEX cluster looking out to the Friday after tomorrow. 7600 is also a large GEX cluster, followed by 7650, so SPX is by no means out of the woods. Signals did align today that may be supportive of continued upside.
Scenario 1: Move up to 7750-7800, then potentially down toward 7500-7600 to get a “proper” VIX spike before a push toward 8000 into year-end.
Scenario 2: Gap down Friday toward 7600-7650, then begin a more steady progression toward 7800, 8000. In either scenario, 7600 right now looks to be a solid support area.
Key Levels: Bullish above 7700 targeting 7750-7800. Bearish below 7700 targeting 7650, then 7600.
QQQ Almost Tested 730 Premarket, Looks Short-Term Bullish to 745-750
Yesterday we noted the pathetic “pullback” for QQQ, noting that 730 may be a destination before a larger bounce. We didn’t have to wait long, with QQQ reaching a little under 732 before bouncing back over 741 into the close, a pretty strong rebound. Upside appears limited for QQQ, and the HMA is rising rapidly, typically a sign of topping, unless a really strong rally is underway with no downside (we’re slightly past that already).
Scenario 1: QQQ tests 745-750, potentially reaching 755, then we see a pullback toward 720.
Scenario 2: Retest 730, then move higher toward 750.
Key Levels: Bullish above 740 targeting 745, 750. Bearish below 740 targeting 735, 730.
Diverging DIA Prints Indecision Candle, Dead Cat Bounce (or More) Likely Due
DIA and IWM have been having their own pity party lately, with both sustaining relatively strong downtrends for weeks. DIA may be nearing a short-term low, and today’s candle reflects indecision after coming close to the lower Keltner channel. DIA saw noteworthy positive option flow at 540 today as well. I’d like to see a rally toward 520-525 and then reassess.
Scenario 1: DIA tests 520-525, then potentially pulls back toward 500 or 510.
Scenario 2: DIA drops again Friday, reaching 500-505, then rebounds toward 525.
Key Levels: Bullish above 515 targeting 520,525. Bearish below 515 targeting 510, 500.
IWM Prints its First Green Candle in 8 Days, Closes Above 280: Bullish?
IWM maintains negative net GEX in fairly extreme fashion, but today’s dip below 280 and wick back above that big GEX cluster further increases the odds of a potential short squeeze targeting 290 soon. Risk still exists toward 275, but downside appears to be limited, from our view.
Scenario 1: Tag 285-290 Friday, consolidate after.
Scenario 2: drop deeper toward 275, then rebound to 290.
Key Levels: Bullish above 283 targeting 285, 290. Bearish below 280 targeting 275.
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