Outlook
We are still bullish, however, given the lowered IV, the upside would be limited. SPY is clearly overbought and some indicators suggest pullback would be due. That doesn't mean we should sell short at here. We expect dips would be bought, like the open at last Friday. 5SMA would work strong support.
While the dip would be bought, the upper side would be limited as well. SPY might exceed 208 or further by mid of this week, where profit taking is expected.
SPY today
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| SPY 5m |
SPY got selling off on pre-market after NFP report, then bought hard after open. Obviously, 5SMA worked as strong support.
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 and STVO suggest more upside in short term.
Waning VTO suggests intermediate top is coming in near future, maybe days, probably a couple of weeks.
Option market was really thin this week. The biggest single SPY option trade was 0408 207.50C on March 30th and the DWV was $765,000. There was no single $1M trade this week. Since the OI volume is not so big, we can't expect much from those OI/DWV information next week.
Anyways, let's see the OI chart. There are two call spikes on 207 and 209, while many puts are bought under 204, so 204 would work as support while 208 would work as resistance.
On the DWV chart, there were
relatively big call buyers before market close, and we know it's not a good idea to buy calls at breakout level. SPY may exceed 208 next week but it will be short lived.
Those option charts were taken from our app Option M8 and you can download it free from
Google App Store or
Apple iTunes Store.
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