SPX should continue in a market pullback tomorrow for options expiration day. The 3, 4 and daily charts are all showing over extensions from the cloud and nearing overbought categories in the RSI. Couple that with growing unease about the markets sustainability and we should see a high open, most likely around the 3390 range and then a melt down from there. Maybe an opening bell pop but I wouldn't count on it lasting very long. 3360 is showing a strong line of support with a very flat Tenkan line and even Kijun line around 3370. I believe the market will most likely fall between the 3390 and 3370 levels tomorrow however it could test the 3360 level. If it does I do expect it to bounce off that level and rally back up to 3375 or so based on the 3 hour chart and cloud projections. 3360 seems to be a level where the futures gained traction so I expect whoever is playing that market tonight will want to keep it that way tomorrow. Puts are very heavy at 3370 and 3350 with calls above 3400 collapsing in value and interest and calls above 3350 gaining a lot of traction and value further confirming my bias of a melt down and hold at 3365. My game plan for tomorrow is to open a vertical call spread on 3400 similar to what I did on Wednesday when the market faded away and wait for expiration. Assuming nothing of note happens before opening bell that causes me to reverse my plan.
For you
SPY traders out there I would expect SPY to trade between 339 and 337 so plan according on your calls and puts. Since SPY is tied to SPX I would plan on the market opening at basically the high of the day and it melting down from there.Should the market open between 3365 - 3385 I expect the market to run up to the mid 3390's and then either consolidate or (most likely) fall back down. At this point we are just way to overextended so the market "should" consolidate and bring it's levels into more firm ground before continuing it's bull run.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.