TOPPING PATTERNS / BOTTOMING PATTERNS:

by John Wicks & warren

Introduction:

This is a guide on how to spot potential higher timeframe trend shifts on the indices. We'll be looking primarily at the VEX positioning rather than the GEX positioning, as it is a reliable source for determining where dealers will be positioned in the sessions ahead.

Bearish Positioning for the Week of 11/7/2025:

• VEX was looking toppy on SPY and QQQ. We can determine this because of a lack of accumulation to the upside nodes.

• 685 SPY was a strong gatekeeper node with very minimal upside accumulation at 690. With price having been delivered from 690 a few days ago, I found the probability of us going back up to 690 was low.

  

  11/3/2025 Pre market outlook on SPY: Price was delivered from 690 a few days prior, with a massive gatekeeper node at 685 preventing upside.
• QQQ had a similar outlook as SPY, with a king node at 635 and high accumulation into the next few days. Similar to SPY, we observed that same stair-stepping pattern. This is a significant confluence to consider.

  

Key point: if the indexes are showing little to no upside accumulation, we can conclude that we may be reaching a "market top". Notice how on SPY we had multiple levels of resistance with no signs of continuation higher.

SPY 690 was showing a hard wall, with a big gatekeeper node at 685. With very little upside accumulation, any spikes higher should be faded into the nodes growing to the downside.

How to trade this bearish bias:

Though VEX positioning shows how dealers are postured in the days ahead, the strategy of trading this positioning is relatively straightforward: by playing node rejections with the knowledge that dealers are postured in an extremely bearish manner. Keep in mind that maps can shuffle at a moment's notice, whether that's intraday or for the days ahead.

An invalidation of this bias would simply be the opposite of how it was formed: higher accumulation at higher strikes, dissipation of values at lower strikes, and stronger positioning closer to the money.

Outcome:

As the heatmaps indicated, SPY sold all the way down to 661, with QQQ tapping its weekly low at 598, a nearly 3% move from peak to trough.

Quiz:

1. What is a valid piece of criteria in identifying how market dealers are positioned?

   1. An analyst report claiming that the indices are due for a pullback.

   2. $5m in put options being bought on SPY

   3. Stairstep VEX exposure to the downside, with comparatively little accumulation to the upside.

   4. Your fib levels show that the market is overextended.

Answer:

C. Dealer positioning is expressed through the Greeks.