Market Recap - 7/22/2015

Once again, the market was under pressure today due to disappointed earnings from some of the big names such as AAPL & MSFT. But the astonishing thing was the market held the opening range and the breadth was slightly negative to neutral. The decliners did lead the advancers, but with a slim margin and was fairly even throughout most of the session. In the NYSE, the A/D was -526 and the NASDAQ was -80 while the U/DVOL ratio favored the DVOL, in the NYSE it was 1.33:1 and 2:1 in the NASDAQ. One of the most troublesome breadth indicators continues to be the new high-new low. The new 52 week low continues to expand while the new high is contracting. This is a clear sign the internal is getting weaker as more stocks have retraced to their 52 week low.

Looking at the numbers, the DJI closed down -68.3 or -0.38%, SPX -5.06 or -0.24%, NDX -51.17 or -1.09%, and the RUT closed with a gain of +3.78 or +0.30%. The primary reason for the NDX to be down over 1% is due to AAPL & MSFT. MSFT was down -1.74 or -3.66% and AAPL was down -5.53 or -4.21%.

When drilling down on the price action of the SPX, one can see it has found short term support near the 6/11/15 close of 2108.86. It made a valiant effort on trying to fill the opening gap during the first hour of trading, and then it failed to breach the opening low near the close. Buyers stepped in right before the close and pushed it back up to the middle of the day’s range.

SPX Daily:

(click on the chart to enlarge)


SPX Intraday:



Looking at the intraday chart of AAPL, it shows the price was converging toward the 125 level since the open. Recall the options market was pricing in a range of 125 – 137 for AAPL earnings move. This range was determined using a combination of ATM straddle and strangle. In order to shake out the straddle & strangle holders, the price will need to go above 125 to cause these options to be underwater. In addition, the weekly options OI chart for AAPL shows there is a high OI of calls & puts at the 125 strike. These OI peaks have the tendency to act as pin level during expiration. One should not be surprised to find AAPL pin above 125 when the weekly options expire.

AAPL Intraday:



AAPL Open Interest (OI)



For tomorrow, if the SPX continues to bounce with the help from AAPL and some of the semiconductor stocks that have reported decent earnings after the close, then look for a potential rally to the 6/23/15 closing level of 2124.20. If the SPX fails to continue its bounce, then look for it to continue its move toward the 2080 level.