Trend Still Supports Bulls as Does Next Weeks Open Interest

Last week here I conveyed that the path of least resistance was higher and explained why what looked like the best pin of 220 on SPY was unlikely to happen (refer back to read understand why). During the week I updated the open interest over twitter which further supported that price would likely stay above 225. (“interest” was supposed to say “interpret” but no TWTR edit button yet).Screen Shot 2017-01-20 at 5.25.33 PM

Next Weeks SPY Open Interest:

SPY-W (16 of 19 pins since inception*): Taken at face value this currently shows put support at 226.5 and not much resistance till 230. This will likely change as the week progresses, but for now it supports the bull case more so than the bear case. SPYW

SPY-F (10 of 14 pins since I began tracking*): Taken at face value this is also considered more bullish. The 223/224 puts are likely some type of spread. Without knowing if they were sold, bought, or the intention behind them, they should be seen as support for now. There is also a bit of put support at 225 and call resistance at 228 with no resistance above there. An interesting observation I’ve had over the years is that when SPY is able to get and hold above many high calls (especially on several strikes) it is indicative of a very strong market. The same is true for puts; thus, should SPY begin to fall through 224 and not quickly recover it is likely a sign of a trend change. spyf

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*For an explanation on how I define pinning see here.

Wednesday 1/18:

Screen Shot 2017-01-20 at 5.31.18 PM

Friday 1/20:Screen Shot 2017-01-20 at 4.02.09 PM