Last week here I said the path of least resistance was higher, but not to be too ambitious about how far it can go. I also tweeted out several times to “curb your enthusiasm on any rallies.” Indeed the market did go higher to hit exactly 211, but was met with a swift rejection. The entire week had large swings in both directions and in the end tested both the high calls (211) and high puts (205), which were highlighted in last weeks post.
Less than two weeks till FOMC
With less than two weeks to a potential rate hike, I would be surprised to see any major breakout or breakdowns, which means your risk/reward next week is to sell rips and buy dips. On a short term time frame (i.e. the start to next week) the market is not oversold or overbought and thus, there is no edge to be found there. Where there may be edge is in the open interest just as it was last week.
SPX stocks above their 10-day MA – No edge short term.
SPY Open Interest: Taken at face value this is more bullish and is almost opposite to what it looked like last week. There are high strike puts at 210, 208 and once again 205. With that information, the likelihood for next week is for the market to remain above 210 and move higher or for any dips below 210 to have a high likelihood of being bought up (be mindful the open interest is subject to changes during the week, which I usually post to twitter).
When using open interest, make sure to use other indicators as well. For example, if SPY should fall below 210 look for other signs (positive divergences, support levels, other sector strength etc.) to determine when to try going long. This is because it could also move down to hit the 208 puts before rebounding (especially knowing the market has been offering up large swings recently). Last week there were high puts at the 208 strike, but the strength of the move down supported by negative and falling breadth didn’t offer a good long entry; however, once it breached 205 (high strike puts and a previous support zone) toward the end of the day Thursday, there were positive divergences that backed up a good long entry point. Knowing this ahead of time can be helpful as you can see by my tweet below to subscribers sent at 2:35pm. The bottom on Thursday was at 2:45pm. 
SPX levels of importance:
Below 2093: 2082, 2070 and 2050. I doubt we go under there next week, but if we do 2042, 2034 and 2020.
Above 2093: 2097, 2103, 2113/2116, 2122 and 2132 which is the all time high.
For intra-day analysis, stock set-ups and real time trade alerts check out my premium service.
Market Countdown to FOMC
Last week here I said the path of least resistance was higher, but not to be too ambitious about how far it can go. I also tweeted out several times to “curb your enthusiasm on any rallies.” Indeed the market did go higher to hit exactly 211, but was met with a swift rejection. The entire week had large swings in both directions and in the end tested both the high calls (211) and high puts (205), which were highlighted in last weeks post.
Less than two weeks till FOMC
With less than two weeks to a potential rate hike, I would be surprised to see any major breakout or breakdowns, which means your risk/reward next week is to sell rips and buy dips. On a short term time frame (i.e. the start to next week) the market is not oversold or overbought and thus, there is no edge to be found there. Where there may be edge is in the open interest just as it was last week.
SPX stocks above their 10-day MA – No edge short term.
SPY Open Interest: Taken at face value this is more bullish and is almost opposite to what it looked like last week. There are high strike puts at 210, 208 and once again 205. With that information, the likelihood for next week is for the market to remain above 210 and move higher or for any dips below 210 to have a high likelihood of being bought up (be mindful the open interest is subject to changes during the week, which I usually post to twitter).
When using open interest, make sure to use other indicators as well. For example, if SPY should fall below 210 look for other signs (positive divergences, support levels, other sector strength etc.) to determine when to try going long. This is because it could also move down to hit the 208 puts before rebounding (especially knowing the market has been offering up large swings recently). Last week there were high puts at the 208 strike, but the strength of the move down supported by negative and falling breadth didn’t offer a good long entry; however, once it breached 205 (high strike puts and a previous support zone) toward the end of the day Thursday, there were positive divergences that backed up a good long entry point. Knowing this ahead of time can be helpful as you can see by my tweet below to subscribers sent at 2:35pm. The bottom on Thursday was at 2:45pm.
SPX levels of importance:
Below 2093: 2082, 2070 and 2050. I doubt we go under there next week, but if we do 2042, 2034 and 2020.
Above 2093: 2097, 2103, 2113/2116, 2122 and 2132 which is the all time high.
For intra-day analysis, stock set-ups and real time trade alerts check out my premium service.
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