Another day in the range
Premarket commentary by the Point-Blank Trading team for May 16, 2023. Gamma data and charts from @TradeVolatility
Indices
The indices closed in positive territory yesterday, albeit on low volume. SPX continues to be in compression moving in a range of just 30 points. Out of 11 SPX sectors 6 closed positive and 5 negative. Materials was the best performer and Utilities the worst. The 20DMA again served as support for the SPX while it acted as resistance for IWM.
For DJI 50DMA and somehow also 100DMA have become supports. continues in sharp negative divergence with DJT, something we should not lose sight of.
NDX continues to be the healthiest by holding above all of its moving averages. It closed on the verge of a breakout to the upside.
FAANG stocks also moved on low volume, its components seem to be digesting the gains from their previous strong bullish moves.
Market Breadth
There was a slight improvement in market breadth indicators. Nasdaq is back to all green and some of its percentages of value above its moving averages are showing where they should be, above 60%.
Total Market (All stocks in NYSE, Nasdaq, and AMEX) also improved, with the percentage of values above 50DMA increasing from 41.5% to 47.4, and of values above 200DMA from 39.7% to 41.9%, although both remain below the critical 50% level.
Volatility
VIX continues to be very weak and trapped in its strong downtrend, but VVIX has continued to print higher lows, has bounced off its upward trend line and is heralding the possibility of high volatility in the near future. This is not yet confirmed, but its behavior indicates so.
VIX1D has shown no major signs of increasing volatility, but has respected the support at 9.33 for several days, however it has not been able to overcome the important 14.57 level, its overcoming could indicate a change of trend in volatility.
Gamma
The Gamma for today in premarket shows important resistance at 4145 and support at 4125.
GTH
During the Global Trading Hours SPX options trading has been dominated by the 4150 and 4155 calls as the most active, followed by 4100 puts and 4135 calls. Traders appear to be bullishly inclined, this despite the negative Retail Sales numbers.
In the overnight SPX futures session, put options trading dominated, with the P/C ratio, prior to the open, at 1.76.
Niveles
Gamma is offering good support at 4125, which is also coincident with the Flip point at 4122.5. If this support holds we will see SPX moving towards 4145/4150 area of very strong resistance. Failure of 4125 will probably lead to a retest of 4100. We do not expect SPX to break its range today.
As for Box Trading, due to its good performance and the price remaining in the same range, we will be using the same boxes as yesterday.
The boxes are built on a 5-min SPX cash chart.
Que tengan un feliz y productivo día de trading.