Options volume going into Friday OPEX has price action stuck in a range, as open interest builds around the 280/2800 strike. Volatility (VIX) is persistent as Friday approaches, with jobless claims and economic data dominating the financial headlines today.
“The number of Americans applying for initial unemployment benefits rose by 5.24 million last week, the U.S. Labor Department said Thursday, bringing the number of people laid off over the past month to more than 20 million, in an unprecedented surge in unemployment.
The consensus forecast had been for an increase of 5.105 million.
The number of people already receiving benefits increased to 11.98 million, the report said, up from 7.46 million a week earlier.”
SPY and S&P500 Open Interest
2800, 2900, and 3000 are the largest open interest strikes going into OPEX, with 2800 nearest to current price action. We’re looking for this level to force price action into a range as discussed yesterday.
SPY Daily Chart
We are anticipating that price action will stay inside the range depicted on the chart (red lines), with Open Interest (280) acting as a magnet. In addition, the 9ema crossed through the 21d rendering support as it rises up to meet price action in this zone. As long as SPY stays above the 9/21d we have a short-term bullish bias.
MACD is above its signal line and rising.
This momentum indicator, in addition to RSI, suggests additional support to rising price action, as bulls remain in control.
A reminder: We are favoring the Nasdaq 100 stocks, (NDX/QQQ), as this index outperforms the larger S&P500.
Futures are just below the best levels of the day, with crude and gold trading higher.
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Happy Trading,
Vinny
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