The Market opened weak again, gained some strength midday, but then waned into the close, with little or no change for the session. At the close, the DJIA was up 9 points, the S&P500 up 2 points and the Nasdaq100 unchanged. For the holiday shortened week, we had decent gains, with the DJIA up 3%, the S&P500 up 3.1% and the Nadaq100 up 2.4%. The indices have now put some distance from important support levels and their 200D-EMA.We’ve also retraced better then 50% of the recent correction in all three major indices.Volume was slightly stronger then recent sessions. Over all, the technical landscape has improved the last few sessions, however, we are nearing a congestion area. The Russell 2000, has displayed moderate strength with a big bounce off its recent low, a positive cross in the MACD, and about to have the 20D-EMA cross back above the 50D-EMA. This could be foretelling of a more concentrated shift to secondary issues. The Financials (XLF), moved up .08 to 14.46. Strong resistance remains between 14.40 and 14.50. Support remains at 14.40, 14.30, 14.15, 14.00, 13.75 and 13.50. Resistance now at 14.50, 14.60, and 14.75. GOLD(GLD) closed at 109.47. Having difficult time holding 109.80, a buy signal, but is maintaining support near 109.00 which is also 50D-SMA. The VIX closed down 2.9% to 20.02.
Long term, we’ve retraced over 50% of correction and if we can hold, upward bias will resume. Short term, bias has reversed to the upside, but we are right near congestion area. Near term, bias has been to the upside on weak volume. We are in a congestion area and may experience additional resistance. Today’s futures(at 8:15am) are slight to moderately higher versus fair value. Economic growth indicators and U.S. Treasury funding have become the new key Market movers.
Major Economic Reports Today:
No major reports scheduled
MAJOR INDICES- Short term support and resistance levels.
DJIA-(close 10402) SP500-(close 1109) N100-(close 1823)
S R S R S R
10355 10500 1108 1115 1820 1830
10279 10540 1103 1120 1812 1840
10247 10544 1100 1128 1800 1845
10245 10650 1098 1130 1795 1850
10200 10725 1093 1135 1783 1862
10150 1092 1143 1775
10000 1085 1150 1758
9945 1080 1742
Options /Derivative Flows
Late last week we saw large buyers of SPX (S&P 500 Index) March 1225 calls, which equated to about a $7 billion trade. These are very far out of the money calls, so the market impact was not huge on this trade, but the prints captured attention nonetheless. Last week put buyers were present in FXI (iShares FTSE Xinhua China) specifically in out of the money strikes in February, March, and May. In MOO (Market Vectors Agribusiness), opening volatility buyers have been present in size, purchasing May 47 calls delta neutral. In XLY (SPDR Consumer Discretionary Select), there has been protective put buying, possibly hedging long positions from a short term reversal in purchasing the June 26 and June 27 puts. ""In EEM (iShares MSCI Emerging Markets) we saw bearish/protective options activity on Friday. The March 39 bearish combos were purchased (buy puts, sell calls) 50,000 times. After falling to a multi-month low in early February, EEM has rallied over 8% off that low. In XLF (SPDR Financials), we saw similar activity as there were buyers of the March 14 puts and sellers of the March 15 calls, with likely similar sentiments as the EEM investors. Also in QQQQ (PowerShares Nasdaq 100) we saw buyers of downside puts, specifically the March 44 line, at least 50,000 contracts."
Disclosure: No positions