On open interest, in last weekend’s update I posted this:
On the open interest front, we had a lot of interesting developments during the week. In the middle of the week we had a lot of shedding of OI more in calls than in puts and this pushed up the Scary Guy Put Call Ratio. Then on Friday’s data, short term is kind of bearish but March added a HUGE amount of puts at 2400, 2500, 2600 etc - this is support for the market and implies we are not going to see lower lows than what we saw in December. Of course anything can happen in the market but this is what the data is implying for now.
And we got a pullback on Monday, set a base, and rallied hard from there over the rest of the week.
Outlook from last weekend’s update:
Market held our bullish important support zone during last week’s pullback and rallied to close higher close to unchanged on the week. Short term data on open interest is kind of bearish so we may get some more weakness early in the week. But at the same time, longer term data is bullish. Price action is also bullish. This suggests that we exceed the highs at 2677.75 sooner rather than later.
We got our weakness on Monday and then rallied the rest of the week, exceeded earlier highs and made it to our next resistance zone at 2710-20 on the S&P 500.
We are pretty much in our next resistance zone at 2710 area. Exceeding this will open up the 2740-50 target area, which is also what the triangle breakout targets. Only question in my mind right now is if we get there and THEN pullback lower to test support or we test support first before rallying up to the 2750 level. My best guess right now would be a continued choppy move higher into the 2750 area followed by a move lower to test the 2650-2620 area.
Note that above the 2750 area lies the very important larger timeframe resistance at 2800-2820 area. Very unlikely for us to directly get through this level without some backtesting of lower support.
NYHL1M positional setup -- which is based on the cumulative value of new highs and new lows on the NYSE -- is still on a buy and continuing to look strong. We booked 1/2 of our QLD long position for close to 10% gains. Plan is to add this back in coming days if we get a pullback. NYHL positional setup has still not given us a buy -- speculation would be that it gives us a buy when the 3rd wave or C wave higher starts.
ES Pivots - Daily pivot is at 2704.5. Resistance R1 is at 2715 and R2 is at 2726. Support S1 is at 2695 and S2 is at 2685. Gray zone areas - we are right around the resistance in the 2709-18 area, second area up is at 2741-50. On the downside, we have support at 2680-73, then 2658-54. Below this support is present at 2623-18 area.
All the best to your trading week ahead.