In last weeks post I talked about a probable bounce, but a new high being in question. We got the bounce and so the obvious question becomes do we see a 2013/2014 move to new highs now or are we putting in a lower high and continuing back into correction zone? With the Greek election outcome, a heavy earnings week, FOMC and a rangebound market it’s anyone’s guess where we go next. Here is what you can look for to help navigate next week.
SPX The bullish scenario is for SPX to stay above the broken trend-line, which also corresponds with both the 20-day and 50-day moving averages (roughly 2040-2045). If that doesn’t hold then the next level I would look to for support is near 2030. Below there and I would be prepared for a test of the 2000 level (see the SPY open interest below). 
If the 202-204 SPY level can’t hold as support then that 200 put strike likely becomes a magnet.
QQQ With a tech heavy earnings week coming up it is interesting to note that about 46,000 weekly QQQ 106 calls were opened very late in the day Friday. Someone looking for good earnings perhaps? If the market cannot hold up then I wouldn’t heed much attention to those 106 calls. Upon a bullish week (along with upside earnings surprises) the 106 strike likely becomes a magnet.
IWM The IWM is currently range-bound. Above 119 and a massive squeeze will likely take it to new highs. Below the 50-day around 117 and I would look for a test of the bottom of the range near 114 and likely overshooting to 113 due to put heavy strikes leading delta hedging (read more here for an explanation). 
The most bullish set-up to new highs would be for a rangebound market that consolidates the recent gains and signaling the acceptance of this new price range. Anything below 200 and the ‘W’ type recovery I mention last week is highly jeopardized. Above 2065 and the market favors new highs.
Good Luck next week. If you are looking for daily market commentary, trade ideas and option education/trading then consider a subscription.
Next Weeks Road Map $SPY $QQQ $IWM
In last weeks post I talked about a probable bounce, but a new high being in question. We got the bounce and so the obvious question becomes do we see a 2013/2014 move to new highs now or are we putting in a lower high and continuing back into correction zone? With the Greek election outcome, a heavy earnings week, FOMC and a rangebound market it’s anyone’s guess where we go next. Here is what you can look for to help navigate next week.
SPX The bullish scenario is for SPX to stay above the broken trend-line, which also corresponds with both the 20-day and 50-day moving averages (roughly 2040-2045). If that doesn’t hold then the next level I would look to for support is near 2030. Below there and I would be prepared for a test of the 2000 level (see the SPY open interest below).
If the 202-204 SPY level can’t hold as support then that 200 put strike likely becomes a magnet.
IWM The IWM is currently range-bound. Above 119 and a massive squeeze will likely take it to new highs. Below the 50-day around 117 and I would look for a test of the bottom of the range near 114 and likely overshooting to 113 due to put heavy strikes leading delta hedging (read more here for an explanation).
The most bullish set-up to new highs would be for a rangebound market that consolidates the recent gains and signaling the acceptance of this new price range. Anything below 200 and the ‘W’ type recovery I mention last week is highly jeopardized. Above 2065 and the market favors new highs.
Good Luck next week. If you are looking for daily market commentary, trade ideas and option education/trading then consider a subscription.
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