Open Interest for Expiration 4/29/16 – Open

This was one of two premium posts  for members posted before week starting 4/25/16

It was a very disconnected week which made picking the right trades challenging. All three days, Wednesday, Thursday and Friday were fake-outs if you will. Luckily we remained level headed and watched the internals. Even though that is what made things confusing, it saved us from trying to get short. As I mentioned over and over again, the selling pressure was very light and until that picks up we simply cannot get bearish.

The one disconnect that is of concern and something we need to monitor over the next week or so with the earning releases is the QQQ’s and momo’s. If they can’t stabilize it will be hard for the market to continue to do well. I guess anything can happen if there is enough rotation, but we know that if momo’s are falling apart, its going to be a very tough market. Next week continues big earnings so lots can change.

For the stocks reporting earnings next week most will have no comment with their open interest chart because earnings trumps all.

SPY: Taking this at face value suggests another close next week below 210. That wouldn’t really surprise me as 210 could be a struggle for some time. It was a tough spot to stay above all through 2015 and it’s very possible price continues to struggle there. It’s also possible it does get over 210 and in that case we would want to see the calls at the 210 strike close down to take some of the risk out of it falling back at the end of the week. If it can stay above 210 there is no call resistance till 215. We know from last week that the 215’s were a rolled trade after someone profited from the 210’s. In general they were very cheap and whether they are a hedge, a lotto, or whatever it’s unlikely price gets there unless the market is creating some sort of blow off top. If price gets below Friday’s low it is likely to fill the gap at 206.25 at some point. That would be a good place to go long for at least a bounce trade. If price gets below 206 the next support area is 205.15.

AAPL: Earnings on Tuesday. Since I doubt the OI will change too much before them, depending on where price opens Wednesday and how good/bad earnings were, there could be an opportunity to get in for a 110 pin. 

AMZN: Earnings on Thursday.

BIDU: Earnings on Thursday. Would be interning to know who put that call spread on and if they bought or sold it.

FB: Reports on Wednesday. 

GOOGL: I don’t think the down move in GOOGL is over, but it is probably better to try to short it on bounces. Our first reference points for now is Friday’s candle. The high was 754, the low was 730 and the close was 737. There is call resistance at 740 and 750. If price can get to 742 (technical resistance), I may scale into puts depending on the strength of GOOGL and the market. If I don’t get in there and price is able to get to 750, I would then buy puts. Alternatively if price moves below 730 then it could fall to 717 but I would not short it at 730 because there may be a lot of false breakdowns before the real one. However, I would buy calls for a bounce at 717. In between 717 and 742 I would do nothing to reduce the risk of getting chopped up. I summed all that up better on a chart in the set-up post.

GS: For the time being financials are back in play. As I’ve stated for a couple weeks now this new development would bode well for the overall market if it continues. For right now this doesn’t look great for the bulls because of all the 160 calls. However, price closed at 166 and as long as it remains above 162.50 I wouldn’t worry to much about the calls especially cause the open interest could change. However, the financials have had a decent run for a couple weeks and a pullback wouldn’t be unheard of and in fact welcomed. I will watch how the open interest develops throughout the week because I would like to re-enter GS on a pullback to 162.5 or 160 if it gets there next week.

LNKD: Earnings on Thursday. Could be a play there after earnings considering the size of that gap from last earnings. 

NFLX: At this point there is high puts and thus support at 92. There are some calls at 100 that would be resistance not simply because of the calls but because 100 will be technical resistance. At this point and until we can see more action in NFLX I don’t see much to do with it. If price can get to 102 then I think puts would be worth the risk. Alternatively near 91.50 would offer a bounce opportunity. In the middle would be tough to do anything but scalp. 

TSLA: It’s hard to deny that the daily chart does look it has a bull flag. A breakout over 254 could get it going. As of now 250 is the best pin with 255 resistance and support near 242/245 (of course if TSLA does have a big move that could easily change). Those levels coincide very well with technical support and resistance. If price can stay over 255, then 259 and 268 are potential targets. Under 255 there is support at 247, 242 and 240.