We’ll be watching the 3100 SPX level this morning, 310 SPY, as futures print below the key gamma flip zone in overnight trading. At 8:30 AM futures are just starting to move above this key level, so watching VIX and HYG today will be key to dealers and market makers positioning.
SPY Daily Range
Not much change from yesterday, where price action consolidates in a narrow range below recent highs printed a week earlier at 324 (+/-). As the range trades out, the 9ema must hold. If that level is taken out on a move lower it would be a warning signal. A loss of the 21d would be a sell signal.
MACD is fading, but RSI remains above 50.
HYG Risk On
HYG and JNK bonds are risk on, risk off indicators. Any breakout here would be fuel for the bulls, should HYG move higher. A breakdown would signal risk off, so watch these two closely.
While price action in VIX, HYG and SPY consolidate, we are systematically reducing the number of open positions leading into the last days of June. Technology usually outperforms in July, so we’ll be using funds collected for a potential rally in July, if seasonality repeats..
Gamma Flip
Watch the VIX as a directional cue: if we see a steady trend higher that indicates implied vols are building and put options are being bought. This is a clue that downside pressure is building. However if the VIX retreats we anticipate markets revert higher with resistance at 3132 (SPX Combo Strike). – Spotgamma.com