Unsettled

The market continues to be unsettled as it is attempting to make a turn. Since the DJI & SPX made a new closing low on Feb 11, 2016 off from their all time closing high, the breadth has been improving. Recently, that improvement appears to have stalled and the breadth started to show some divergence. In addition to a diverging breadth, the non-confirmed recovery high based on the Dow Theory remains unresolved. Until the divergence and the non-confirmation issues are resolved, one should continue to be on the defensive and be very selective on either side of the trade, long or short.

In the short term, the price action indicates indecision and prone to a pullback. And depends on the market internal, this pullback could turn into a correction. The SPX formed a evening star like pattern after last Friday’s close. The Thursday high came near the trendline from recent closing highs and backed off. A possible expectation is for price to pull back toward the potential short term support near 2048.70. If this levels proved not to be the support, then the next possible support could be back to near last September FOMC intraday high at 2020.86. If the market internal improves, then these possible upside targets could be in play: 2091.26 & 2109.79.

SPX:

(click on the chart to enlarge)



For the SP500 ETF, SPY, the potential short term support is near 205.77, if failed then 203.87-202.89. Possible upside targets are: 209.67 & 211.

SPY:




For the emini SP500 futures, potential short term support is near 2053.25, then 2032.25-2011.75. Potential upside targets are: 2091.50 & 2105.25

ES_F:




From the open interest for next week’s SPY options and the potential support & resistance levels, the 205 & 209 could be in play for the pin.

SPY OI:




Remember, cash is a position!