Outlook
We are still bullish. SPY will be grinding up by the end of this month with window dressing, however, NFP report could give the market some turbulence.
SPY today
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| SPY 5m |
SPY gaped down then ground higher and Yellen said something at Congress then market lifted off. Volume wasn't impressive today.
CVI/STVO/VTO and trends/overbought/oversold
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| $SPX CVI |
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| $SPX STVO |
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| $SPX VTO |
CVI suggests very short term momentum is up with some room. STVO suggests near term consolidation. VTO suggests mid-term momentum started abating.
OI is skewed to call side on 03/31 and put side on 04/01. Notice 03/31 has far more OI than 04/01.
OI 03/31 has two call peaks at 204 and 207. Part of those peaks come from
big bull call spread opened on 03/22 and the seller of this CS must be feeling pain in his ass now. Unless SPY pulls back under 204 by 03/31, the seller of this CS has to buy back 204.00C and this process will lift SPY further. This is why we are bullish by the end of this month.
The story is slightly different for 04/01. The OI is not so built up as 03/31. This means it's not so easy for the tail(option) wags the dog(SPY). SPY may end up at max pain, which is 203.50 at this moment. We think NFP report could give SPY some pullback.
By the way, the option market was thin again today. Don't get bothered by watching DWV charts today.
Happy trading.
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