NDX is finding repeated support at trendline off March lows, now around 1700. It payed to watch that cash index on Thursday, but it is also clearly establishing the line in the sand for the markets. It is the same support line for QQQQ (41.80). Option call activity at the 42 April strike is still a .80 ratio, enough puts to hold us up somewhat, but with more calls building in the past few sessions (puts outnumbered calls last week, that has now been reversed), optimistic speculation is increasing. Initially bullish, but not necessarily so for option expiration week. I would be very surprised if we don't at least get a swipe at 41.50, maybe even 41.35, an area I would buy. The 41 strike is very supportive, so look for that swing trade opportunity next week should it arise. QQQQ 42 is still max pain and will thus remain a magnet. Curiously enough, the sentiment is more pessimistic with SPY, giving us put support at 129, right around SPX 50 dma, so I like SPX next week if ES can crack 1298.50.
One striking aspect of Thursday's session was the NYSE yearly lows at 2.5 times the yearly highs. That gives pause, so watch your step. Some real money is offloading on these intraday rallies. Yields are posing a threat to equities, at least in the near future. Watch the ten year note and the 5% level. The markets found support after initially selling off when Fed governor Kohn implied a risk of overshooting was present. But I consider that brutal pre-open selling activity to be a warning shot accross the bow. That said, any early sell-off next week could be a swing long opportunity, but these are times to collect the paycheck when it comes, so don't be afraid to lock in profits. After all, we are playing a giant game of musical chairs and you don't want to be the lone sucker, i.e retail trader, standing in the room with nowhere to sit but on your behind. I will be profiling long set ups, but I want you to start preparing for a second-half downturn in the markets and the trading opportunities it will present.
