Hot air balloons flying over the valley at Cappadocia, Turkey

Stocks had a big rally, with the S&P 500 up 2.45% and the Nasdaq 100 ETF QQQ rising by 2.33%. The rally wasn’t a surprise, given we have seen these countertrend rallies follow OPEX regularly. What was surprising was how quickly the market rallied. I’m skeptical of this rally continuing now. I was only looking for a gain of around 3,800 on the S&P 500, and most of that rally was already fulfilled. I think we could even refill the gap below 3,700, maybe as soon as tomorrow.

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VIX

The VIX was hardly down today, despite the big rally, dropping by less than 1 point to close at 30.20. I would have expected a more significant drop in the VIX given the big rise in the S&P 500. This is all contributing to my suspicions about this rally.

Of course, tomorrow will be Jay Powell’s turn to go in front of Congress, which presents a risk to equities.

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Financial Conditions

Additionally, financial conditions tighten today, as measured by the IEF/LQD ratio, and usually, when spreads widen, it is not favorable for stocks. The ratio hasn’t broken out to new highs, but it needs to be watched closely.

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META (META)

Meta keeps dropping, falling another 4% today. I don’t know what is going on here. Clearly, something is not good. Maybe they shouldn’t have changed the name from Facebook. However, the $155 level is essential from a technical basis because if support breaks, the next region for support will come at the pandemic low of around $139.

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Roblox (RBLX)

Roblox seems to again be in a position to break out as the RSI nears potential resistance levels and the stock price approaches a downtrend. This is the stock’s second attempt since June to breach that trend line.

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