Good Morning:

• I will be in the Trading Room today to give some thoughts on Monthly Options Expiration in real-time. There are not always day trading opportunities, but something valuable is still to be learned. I will discuss the concepts around WEM, DEM, and the general influence of options on the market.
• The WEM remains between 4205 and 4355. It is not useful to plan a DEM today – as expiration has more influence than implied volatility. The largest Gamma expires in rank order at 4300, 4250, and then 4200. You can better see the levels in the chart above. Each of these levels has the potential to attract price and then pin it as dealers work their books.
• Notably, the market has already spilled into the 4250 expiration overnight. That means the market is at break-even for the week and smack dab in the middle of the three major expiration levels.
• The Algo is in sell mode, and the market is opening below the 5-day line. So we remain in cash and slightly bearish for a pullback.
• Outside of the options expiration influences, resistance is at 4260 (SPY 450) and 4300. Support shows at 4200. But the market is likely to stay in fairly tight trading ranges. As price breaches a level, it reverses polarity.
• Join us in the trading room if you can.

 As always, stay tuned, and have a great weekend.

A.F. Thornton