Morning Notes – 6/17/2022

Good Morning:

• Yesterday was brutal, though not a surprise to subscribers. It was a gap and pin day, with a balancing range of plus or minus 40 points centering around 3670, also the bottom of the S&P 500 index channel.
•  I am still viewing 3700 as a support/resistance “pivot” line, with further support at 3670, 3650, 3620, and 3600.
• Resistance sits at 3755 and then 3800.
• The overnight range is in the upper half of yesterday’s balancing range, but still well below yesterday’s gap.
• The market is stretched like a rubber band 3-ATRs under the daily mean and is due for a snapback/short-covering rally at any point. Shorting here is unwise unless one is absolutely convinced the market will crash here. 
• The better strategy now is to patiently await a long buy signal
• There were few puts cashed in yesterday, so a lot of puts will expire or get rolled today, and that should provide some taiwinds for the market.
• But the options market is only one piece of the puzzle. Strong institutional selling has been dominating the markets recently.
• I still see signs of an interim low develping. We are at the SPX channel bottom. Junk Bonds have not confirmed the S&P 500 and NASDAQ lows. I am tracking the JNK hourly. There are Demark price decline exaustion signals. Positive momenum divergences continue developing across a broad range of sectors. Breadth indicators join sentiment indicators at bearish extremes (which is bullish).
• It escaped my attention that Monday is the new Juneteenth holiday commemorating the end of slavery. Domestic financial markets will be closed, except for Globex.
• I am already wondering how the holiday might affect Quarterly Expiration today. Even after expiration, dealers must reconcile their books, usually the following Monday. Now this will occur Tuesday.
• Tuesday is typically when the market resumes its trend. Maybe now it will be Wednesday.
• With everything moving forward a day, it could make today all the more interesting.
• Trying to day trade during Quarterly Expiration is unwise unless you have a specific strategy (e.g., a pinning strategy) or exceptional, long-term trading experience.
• And pinning does come to mind. As I have pointed out over the last week, 3700 has the largest open interest and Gamma expiring today and has already drawn the market back up overnight.