Let's talk about $310, $300 and quad withching
So if you're not familiar with the term quad witching:
"Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. While stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September, and December."
www.investopedia.com...uadruplewitching.asp
It is also notable that this day is also SPY's ex dividend date. Meaning if you own the stock by EOD on these days you get paid the current dividend SPY pays out. We'll touch on this in a second.
In general i don't really pay attention to quad witching but that was until i just paid attention to the 06/19 open interest for SPY and SPX. I looked into it a little more and this is the third largest quad witching on record. OI breaks down as such:
SPY
$300c: 108k OI with 123k volume today
$310c: 58.6k with 68.7k volume today
SPX
$3000c:63.8k with 242 volume
$3100c: 36.1k with 20.2k volume
What does this tell me? It tells me why we've been meandering around up here all week after having that huge bout of volatility last week. The big money that probably bought these options either at the bottom or on the way up is about to have a HUGE payday.
Let's do the math. If you have 108k call options that, if exercised, earn each share $1.87 per that means you have a possible 10.8m shares outstanding worth just by themselves just over $20m in dividend payments. And that's just on SPY. That's not including the other indexes, index ETF's, and single stocks. The bulls want their payday.
At first i thought we were just in the GEX (gamma exposure) sweet spot for price and with the lack of volume we were pinned between the MM's lowest amount of gamma exposure. (squeezemetrics.com/d...load/white_paper.pdf). But after realizing just how much OI we have right now it's pretty clear to me no one wants to rock the boat. It does look like we've been seeing sell pressure as you can see from the chart. But multiple times the past couple days the bulls have been called off the bench to defend key levels. Today being $310/$3100. But here's the thing. The market is forward looking, like a year or two. It's already forgotten about 06/19 (tomorrow). But again, the bulls want their hard earned paychecks.
For some reason this $312.10 price has been super important since we've been up here. We fought over it all week and again today we made multiple runs at it. We even had the bulls try to take a last minute stab at it again today to get us to close over it.
We did break that level yesterday and by gapping down this morning. And where did we gap down to? You guessed it. We opened at $310.01. Coincidence? Nope. We immediately traded away from it. And as soon as we hit $312.10 volume died. That obviously wasn't without a couple bumps in the road obviously. The bears look like they have their game face on.
Which brings me to my next point: Reindeer games. The bears have been slowly eating chart away from the bulls the past couple days. And today i thought that we were going to go for the gap and down towards $300. I wouldn't be surprised to see some sort of ****ery overnight to have the bulls sweating. But if that's the case they'll fight like hell in the morning to keep the market as high as possible.
Usually quad withching is a non event. Generally you'll see some bouts of volatility and a couple curious dislocations and weird price movements. Which brings me back to ex dividend. If this is your first time trading SPY during one of these tomorrow you'll see the daily candle spike an ungodly amount after close, and the price the next day at open will generally be LESS by about a dollar or two. This generally takes about a month or two to recover. Also, this is important. IF YOU HAVE ANY IN THE MONEY SHORT CALLS YOU WILL BE ASSIGNED. If you have a spread, great, but you're still on the hook for the $1.87 per share dividend payment as shorts pay.
The questions is what games will the bears play overnight if any, and what happens when the buying support at these levels evaporates? Will it? Will everyone reload with their now exorbitant amount of long shares and try and push price higher? Who's to tell. What i can tell is the past couple days gravity has been taking hold. But that is also with 0 meaningful volume until the bulls need to buy up a quick dip.
We had worse than expected jobs numbers today (honestly, who's in charge of these) and the market tried to react but the PPT's (plunge protection team) was there to backstop it with a wall of liquidity. Just at close today i saw blocks of 50-75k shares driving price higher. It's hilarious to me. Let's take a look.
Today we gapped down obviously. We immediately went to fill the gap and eventually got rejected. Only to have a bouts of volume come in to send us higher or lower. We got back to $312.10 and volume immediately died. I think at lunch we had only traded somewhere around 30m shares when usually we're at 60-80m (post Feb). We printed a bear pennant that eventually broke. But the bears didn't pick the ball up and we traded on a low volume algo pump back towards $312.10. Again, we had an infusion of volume in one 5m candle that set the tone for us making another run for $310. This is where the bulls got off the bench. They fought like hell for $310 and then took the momentum to double bottom us and send us all the way back to closing in the green.
The hourly is a texbook bullflag. But it's rare to have these this clean on SPY and SPX. RSI is literally neutral at 50
Same on the daily. But note that we still have a bearish MACD reading and also the BBands are starting to tighten. Move inc
SPX 5m holding the line at $3000
I mean look at that
That trendline we're sitting on is from the lows of last summer/fall
Little bit of a different look on ES hourly though. Looks like a rejection from key levels and now we're forming a bear pennant
IWM just playing the same game as SPY. Holding the line for that payday
Daily bullflag
VIX showing softness but holding at the .5 fib... Watch for a rounded bottom (sign of reversal)
DJI looking like it wants to roll over though
This is what i'm looking for on NDX. Lots of gaps down below..
Silver in danger zone
Gold traders also looking for that payday
10 year pointing slightly to a risk off attitude..
The bulls want to get paid. And they will defend $310, and $300 with everything they have. There will be an insane amount of volume after close tomorrow for everyone to have shares for the ex dividend and you will seem some weird divergences and dislocations while everyone reallocates. The end of the quarter is coming up and we'll probably start to see some repositioning.
I'm still bearish but the chart is clearly at this point (weirdly) printing a bull flag. Is this trickery, or will it play out? This game is not easy, so tread lightly. Watch for tom ****ery overnight to try and trap some bulls. Inversely watch for a relief gap up in the morning as well so it gives the bulls some breathing room before expiry at EOD.
Targets below are $305.87, $302, and $300. Above $315.15 and the bottom of gap around $319, anything above that is around $330.
I wouldn't blame you for sitting on cash through tomorrow into Monday. But i'm still holding out for this to be the B leg completion and the start of a C wave down into around $300-$294. Time will tell. -3 delta as of today's close.
Definitely keep your head on a swivel and happy trading!
This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.
"Quadruple witching refers to a date on which stock index futures, stock index options, stock options, and single stock futures expire simultaneously. While stock options contracts and index options expire on the third Friday of every month, all four asset classes expire simultaneously on the third Friday of March, June, September, and December."
www.investopedia.com...uadruplewitching.asp
It is also notable that this day is also SPY's ex dividend date. Meaning if you own the stock by EOD on these days you get paid the current dividend SPY pays out. We'll touch on this in a second.
In general i don't really pay attention to quad witching but that was until i just paid attention to the 06/19 open interest for SPY and SPX. I looked into it a little more and this is the third largest quad witching on record. OI breaks down as such:
SPY
$300c: 108k OI with 123k volume today
$310c: 58.6k with 68.7k volume today
SPX
$3000c:63.8k with 242 volume
$3100c: 36.1k with 20.2k volume
What does this tell me? It tells me why we've been meandering around up here all week after having that huge bout of volatility last week. The big money that probably bought these options either at the bottom or on the way up is about to have a HUGE payday.
Let's do the math. If you have 108k call options that, if exercised, earn each share $1.87 per that means you have a possible 10.8m shares outstanding worth just by themselves just over $20m in dividend payments. And that's just on SPY. That's not including the other indexes, index ETF's, and single stocks. The bulls want their payday.
At first i thought we were just in the GEX (gamma exposure) sweet spot for price and with the lack of volume we were pinned between the MM's lowest amount of gamma exposure. (squeezemetrics.com/d...load/white_paper.pdf). But after realizing just how much OI we have right now it's pretty clear to me no one wants to rock the boat. It does look like we've been seeing sell pressure as you can see from the chart. But multiple times the past couple days the bulls have been called off the bench to defend key levels. Today being $310/$3100. But here's the thing. The market is forward looking, like a year or two. It's already forgotten about 06/19 (tomorrow). But again, the bulls want their hard earned paychecks.
For some reason this $312.10 price has been super important since we've been up here. We fought over it all week and again today we made multiple runs at it. We even had the bulls try to take a last minute stab at it again today to get us to close over it.
We did break that level yesterday and by gapping down this morning. And where did we gap down to? You guessed it. We opened at $310.01. Coincidence? Nope. We immediately traded away from it. And as soon as we hit $312.10 volume died. That obviously wasn't without a couple bumps in the road obviously. The bears look like they have their game face on.
Which brings me to my next point: Reindeer games. The bears have been slowly eating chart away from the bulls the past couple days. And today i thought that we were going to go for the gap and down towards $300. I wouldn't be surprised to see some sort of ****ery overnight to have the bulls sweating. But if that's the case they'll fight like hell in the morning to keep the market as high as possible.
Usually quad withching is a non event. Generally you'll see some bouts of volatility and a couple curious dislocations and weird price movements. Which brings me back to ex dividend. If this is your first time trading SPY during one of these tomorrow you'll see the daily candle spike an ungodly amount after close, and the price the next day at open will generally be LESS by about a dollar or two. This generally takes about a month or two to recover. Also, this is important. IF YOU HAVE ANY IN THE MONEY SHORT CALLS YOU WILL BE ASSIGNED. If you have a spread, great, but you're still on the hook for the $1.87 per share dividend payment as shorts pay.
The questions is what games will the bears play overnight if any, and what happens when the buying support at these levels evaporates? Will it? Will everyone reload with their now exorbitant amount of long shares and try and push price higher? Who's to tell. What i can tell is the past couple days gravity has been taking hold. But that is also with 0 meaningful volume until the bulls need to buy up a quick dip.
We had worse than expected jobs numbers today (honestly, who's in charge of these) and the market tried to react but the PPT's (plunge protection team) was there to backstop it with a wall of liquidity. Just at close today i saw blocks of 50-75k shares driving price higher. It's hilarious to me. Let's take a look.
Today we gapped down obviously. We immediately went to fill the gap and eventually got rejected. Only to have a bouts of volume come in to send us higher or lower. We got back to $312.10 and volume immediately died. I think at lunch we had only traded somewhere around 30m shares when usually we're at 60-80m (post Feb). We printed a bear pennant that eventually broke. But the bears didn't pick the ball up and we traded on a low volume algo pump back towards $312.10. Again, we had an infusion of volume in one 5m candle that set the tone for us making another run for $310. This is where the bulls got off the bench. They fought like hell for $310 and then took the momentum to double bottom us and send us all the way back to closing in the green.
The hourly is a texbook bullflag. But it's rare to have these this clean on SPY and SPX. RSI is literally neutral at 50
Same on the daily. But note that we still have a bearish MACD reading and also the BBands are starting to tighten. Move inc
SPX 5m holding the line at $3000
I mean look at that
That trendline we're sitting on is from the lows of last summer/fall
Little bit of a different look on ES hourly though. Looks like a rejection from key levels and now we're forming a bear pennant
IWM just playing the same game as SPY. Holding the line for that payday
Daily bullflag
VIX showing softness but holding at the .5 fib... Watch for a rounded bottom (sign of reversal)
DJI looking like it wants to roll over though
This is what i'm looking for on NDX. Lots of gaps down below..
Silver in danger zone
Gold traders also looking for that payday
10 year pointing slightly to a risk off attitude..
The bulls want to get paid. And they will defend $310, and $300 with everything they have. There will be an insane amount of volume after close tomorrow for everyone to have shares for the ex dividend and you will seem some weird divergences and dislocations while everyone reallocates. The end of the quarter is coming up and we'll probably start to see some repositioning.
I'm still bearish but the chart is clearly at this point (weirdly) printing a bull flag. Is this trickery, or will it play out? This game is not easy, so tread lightly. Watch for tom ****ery overnight to try and trap some bulls. Inversely watch for a relief gap up in the morning as well so it gives the bulls some breathing room before expiry at EOD.
Targets below are $305.87, $302, and $300. Above $315.15 and the bottom of gap around $319, anything above that is around $330.
I wouldn't blame you for sitting on cash through tomorrow into Monday. But i'm still holding out for this to be the B leg completion and the start of a C wave down into around $300-$294. Time will tell. -3 delta as of today's close.
Definitely keep your head on a swivel and happy trading!
This is not trading advice. This is my own personal opinion based on my own personal TA. You are responsible for your own trades.
Komentarz:
This is our third peak into this demand zone. We'll see if it holds. Remember, if we open above $312.10 that's bullish and they'd need to hold it. Bearish if they don't
Komentarz:
Huge volumes already especially in ES. Seeing blocks of 200-300 contracts in the book. Someone just cleared the book on SPY to $310.60.
Komentarz:
Opened in supply zone** not demand zone.
If they go for the gap they have a confluence of support before they get there including $312.10 and historical trendline support at around $312.65. Gaps at like $311.60. If we knife through it for whatever reason $310 is the bogey.
If they go for the gap they have a confluence of support before they get there including $312.10 and historical trendline support at around $312.65. Gaps at like $311.60. If we knife through it for whatever reason $310 is the bogey.
Komentarz:
Knifed through $312.10 and filled gap REAL quick. We'll see if the bulls can take it and run with it.
Komentarz:
You need volume to pick up for this not to be a bear trap.
Komentarz:
Alright game time bears
Komentarz:
Next gap fill at $307.12
Also, the ex dividend is 1.87%, not $1.87.