SPX/QQQ
A good start to June with some new money, but it was a Friday. Futures were higher from the open of trade with great Jobs report, holding a fairly tight range into the actual jobs report. The President tweeted a couple of hours ahead of the release that he was looking forward to the numbers, and that was interpreted as an indication they would be good. Leaving all that Fun aside, lets look at market mechanics.
OI and our EW indicator are indicating a significant divergence into next week, so it is our duty to monitor sentiment versus Open Interest in order to make correct decisions.
First: The spike we had been expecting, concluded last week as we can observe on the attached weekly chart elaborated by Joel Withun. This same weekly chart is now indicating downside at least until June 15th, Put Call Ration, is at 2.064 so projection is valid based on our experience. Opposing to this is the fact that expiration for this Week is positive when compared to EOW1, up in a moderate fashion.
Helping to the fact that the expiration for this week is moderately pointing higher are the inverted volatility charts, weekly and monthly are certainly supportive of more upside; volatility is not excessively bullish but supportive.
Second: Cycles are close to be overbought with probabilities for a high tomorrow Monday June 4th; I think we have a combination of factors that could give us a high tomorrow, the deterioration could start tomorrow after mid of the session or on Tuesday. Please pay attention to supports before assuming correction is starting.
EW Analysis:
We have advised you for the past five or six weeks to be long $QQQ,but now the medium term chart could point to a top at the 1.382 extension at 175.50
and the subdivisions should point lower to 173.84
with a conservative average at 174.45, aggressive traders could do well by looking for 176.83. Important supports at 170.
For $SPX,
our approach has not changed micro subdivisions point to 2751/2755. The micro subdivisions we are using as alternative 2, perfectly allow the 2751/2755 range with extensions to the upside probable. For your safety we are not going recommend to short the market aggressively excepting SPX breaks under 2713 with follow through under 2702.
Weekly and Monthly Charts are still showing some strength..
Most $QQQ names in our portfolios have room to go higher, between 3 and 6% before major targets met.
Sometimes market is clear, sometimes market is not, sometimes you catch all the ride, sometimes you are late to the party… remain calm and focused, stay disciplined and do your own homework. Have we all a nice trading week
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Seeking Options Team – RQLAB
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