Tuesday, June 14, 2011

Big Money Needs Neutrality By Friday OPEX

SGS is Long (as of close of 4/1/2011)
RTS 20110404 Long Portfolio (Bench Mark)

If you had written (sold) tons of indices puts and calls, on or just prior to their expiration what state would you want indices to be at?  The answer is: Neutral, because it's in that state of neutrality that you would make most money by rending nearly all of those options worthless.  If indices are oversold or overbought you would end up losing money.  That's exactly where Big Money is pushing indices prior to Friday.  Since indices are still oversold, Big Money will keep on pushing them higher tomorrow and Thursday to achieve neutrality. 

Neutrality in TA is where trend lies.  In a more immediate term, it's 13D EMA (the short term dynamic trend line) and in a longer term it's the primary up trend or down trend line.  For SPX, those neutral levels would be around 1294 (back test of 13D EMA) and 1319 (back test of the primary up trend).


Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.