Option Analysis Setups: $SPY Bearish Post FOMC, Likely Bearish through Quarterly Op-Ex
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Weekly Recap:
● A sideways trip pre-FOMC became a 1-way trip (lower) post-FOMC
● Markets came within a few points of the yearly lows this week
● VIX finally broke the 28 barrier for the first time in months
● There is no FOMC till Nov, so rate policy remains in play for weeks now
Major Market Indices & Option Flows
1: S&P 500 ETF ($SPY)
Last week markets patiently waited till the FOMC which took traders by surprise as the FOMC came out hawkish, leaving unprotected traders seeking for protection post FOMC late into the press conference with the SPY’s losing the 380 handle, a key support zone.
Over the next two sessions, markets lost another 15 points before rebounding a bit to close the week, but markedly down for the week and month.
With no FOMC on deck till November, we feel there are two paths ahead of us. The first path is till the end of the month which is the quarterly op-ex coming this Friday. That has significance because the JPM collar will be rolled, and the associated hedges with it.
Currently the low end is around 3565 in the SPX which is around 356 in SPY’s. Hitting this would mark a new yearly low and likely trip some stops.
Overall, we are bearish till the end of Sep and want to sell rallies into resistance.