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Sunday, May 09, 2021 6:56:32 PM
NYAD and SPX Confirm New Up Leg for Rally
By: David Larew | May 9, 2021
Put Buyers Overwhelmed After Jobs Report
Prior to Friday's employment report, the 415 and 420 strike prices on SPY were the key points of contention for day traders and algos. After the jobs number, the call buyers came in and finally took out the 420 area, which now becomes support as the 420-425 strike prices become the line in the sand.
The three options expirations (M, W, F) for the SPDR S&P 500 ETF (SPY) last week were mixed, as put buyers were in charge for much of the week at the 415-418 strike prices. But once this resistance area gave on Friday, it caused the dealers who had been selling puts and stocks to reverse course and buy stocks and stocks index futures to hedge their call sales. The net effect was that the market moved higher.
Remember, when call buyers force dealers to hedge their call option sales via stock and stock index futures purchases, stocks tend to rise, as we saw on Friday. In contrast, earlier in the week, put buyers forced dealers to sell puts and then hedge their bets by selling stocks and selling index futures to hedge. The bottom line is that the options market, specifically weekly expirations on SPY, continue to exert a credible influence on the overall stock market.
* * *
NYAD Breaks Out, Signaling Uptrend is Intact
The New York Stock Exchange Advance Decline line (NYAD) made a new high, which was confirmed by the S&P 500 (SPX). This suggests that the uptrend, for now, remains intact.
Indeed, the take-home message is that, as long as NYAD continues to make new highs, remains above its 50- and 200-day moving averages and its corresponding RSI reading remains above 50, the trend remains up. This combined set of observations has been extremely reliable since 2016 and shows no signs of becoming unreliable as of this writing.
The Nasdaq 100 index (NDX), is trying to find a tradable bottom after several weeks of being the weakest area of the market. Still, even though it bounced, it was not able to close above its 20-day moving average.
The S&P 500 (SPX) finally delivered a new high and a breakout above 4220, with support remaining at 4000 to 4150. The index remains above its 20-, 50- and 200-day moving averages and the new high not only confirmed the new high on NYAD but came on bullish action on Accumulation Distribution (ADI) and On Balance Volume (OBV).
Joe Duarte
In The Money Options
Read Full Story »»»
DiscoverGold
By: David Larew | May 9, 2021
Put Buyers Overwhelmed After Jobs Report
Prior to Friday's employment report, the 415 and 420 strike prices on SPY were the key points of contention for day traders and algos. After the jobs number, the call buyers came in and finally took out the 420 area, which now becomes support as the 420-425 strike prices become the line in the sand.
The three options expirations (M, W, F) for the SPDR S&P 500 ETF (SPY) last week were mixed, as put buyers were in charge for much of the week at the 415-418 strike prices. But once this resistance area gave on Friday, it caused the dealers who had been selling puts and stocks to reverse course and buy stocks and stocks index futures to hedge their call sales. The net effect was that the market moved higher.
Remember, when call buyers force dealers to hedge their call option sales via stock and stock index futures purchases, stocks tend to rise, as we saw on Friday. In contrast, earlier in the week, put buyers forced dealers to sell puts and then hedge their bets by selling stocks and selling index futures to hedge. The bottom line is that the options market, specifically weekly expirations on SPY, continue to exert a credible influence on the overall stock market.
* * *
NYAD Breaks Out, Signaling Uptrend is Intact
The New York Stock Exchange Advance Decline line (NYAD) made a new high, which was confirmed by the S&P 500 (SPX). This suggests that the uptrend, for now, remains intact.
Indeed, the take-home message is that, as long as NYAD continues to make new highs, remains above its 50- and 200-day moving averages and its corresponding RSI reading remains above 50, the trend remains up. This combined set of observations has been extremely reliable since 2016 and shows no signs of becoming unreliable as of this writing.
The Nasdaq 100 index (NDX), is trying to find a tradable bottom after several weeks of being the weakest area of the market. Still, even though it bounced, it was not able to close above its 20-day moving average.
The S&P 500 (SPX) finally delivered a new high and a breakout above 4220, with support remaining at 4000 to 4150. The index remains above its 20-, 50- and 200-day moving averages and the new high not only confirmed the new high on NYAD but came on bullish action on Accumulation Distribution (ADI) and On Balance Volume (OBV).
Joe Duarte
In The Money Options
Read Full Story »»»
DiscoverGold
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Caveat emptor!
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