Last weekend I discussed being very much on the sidelines as I saw the possibility of rangebound action or a pull-back. The IWM, just as it did a few months ago led the way down last week. Although the Russel is helpful in gauging the overall risk appetite of the market, it should not be looked upon as the end all be all. If you recall in March when the the Russel began it’s correction it was highly anticipated that the SPX would follow and yet it never did. Also with earnings upon us, any pull-backs may be muted until after we see how companies have been performing as of late.
Having said that, the number of good set-ups to choose from going into next week are far less than they have been in the last couple of months. Given that I currently see us in short-term corrective action (either through price, time or both), I intend to keep trading very light, using less capital and for shorter hold times.
Working off overbought conditions based on stocks above the 50-day MA: 
Here is the SPY open interest for next week which is the monthly expiration and has more volume on each strike. Based on the open interest alone the range is from 195 to 199 (that gives us more room to the upside than downside). If 195 is breached and not quickly recovered, there is potential for a larger sell-off to occur. Read more about why here. 
Have a good weekend!
If you are looking for some guidance with trades and with being patient in NOT taking trades…plus other good stuff then check out a subscription. Check out the testimonials as well.
Cautious in an Uptrend + SPY Open Interest
Last weekend I discussed being very much on the sidelines as I saw the possibility of rangebound action or a pull-back. The IWM, just as it did a few months ago led the way down last week. Although the Russel is helpful in gauging the overall risk appetite of the market, it should not be looked upon as the end all be all. If you recall in March when the the Russel began it’s correction it was highly anticipated that the SPX would follow and yet it never did. Also with earnings upon us, any pull-backs may be muted until after we see how companies have been performing as of late.
Having said that, the number of good set-ups to choose from going into next week are far less than they have been in the last couple of months. Given that I currently see us in short-term corrective action (either through price, time or both), I intend to keep trading very light, using less capital and for shorter hold times.
Working off overbought conditions based on stocks above the 50-day MA:
Here is the SPY open interest for next week which is the monthly expiration and has more volume on each strike. Based on the open interest alone the range is from 195 to 199 (that gives us more room to the upside than downside). If 195 is breached and not quickly recovered, there is potential for a larger sell-off to occur. Read more about why here.
Have a good weekend!
If you are looking for some guidance with trades and with being patient in NOT taking trades…plus other good stuff then check out a subscription. Check out the testimonials as well.
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