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Monday, December 3, 2018

Daily update 12/3 SPY option data

It looks like Trump and XI made an agreement that nobody seems to understand exactly.  Near as I can tell Trump agreed to not escalate tariffs for the first 90 days in 2019 while negotiations continue.  I hear other things involved, but China has not verified any of them as far as I can tell. 

SPX opened up big on the news, but sellers started right away.  Breadth was +72%.  New highs picked up to 79.  New lows dropped to 123 (kind of high for a big gap up).  SPX closed above the 50 SMA for the first time since early Oct.

The futures moved up to the 200 SMA overnight, but failed to close above it.  This could be important resistance.

The green count reached overbought levels.

The McCellan oscillator is also overbought.

For some strange reason there are a lot of strikes at .50 intervals.  The 280 strike has a lot of calls which should provide considerable resistance.  The 2800 level on SPX has already proved to be resistance anyway.  The next resistance levels are 285, and 288.  The 270 strike has the highest number of puts on the chart, but not enough to suggest really strong support.  If the market rolls over here there isn't much in the way of support nearby.

Outside of the two big up days caused by news the breadth has been poor on this rally.  So will it get legs or will it retrace the recent news driven move?  Is this going to be an important short term top that leads to a full retest of the low?  Anything is possible of course.  I think the bulls need to prove themselves still.  The good news in the short term is all out and the market is short term overbought.  In order for the market to keep going up the bulls have to really want it.  I can't see any indication that will be the case.  But you never know.  Even if the market is going to head higher this month it seems likely to retrace some of this up move in the near term.


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