Options Ex, A Repeat of February?

I haven’t had much time for blogging lately but I want to point out the similarities between this options expiry and last February’s.

Last February we were coming off of a long, big move higher and a week or so before options ex we saw a sharp move to the downside. Into options ex, we reversed higher and then pretty much pinned to about $333 before a micro selloff on Friday. This is significant because the market was basically ignoring the coronavirus only until options expired. Then on Monday, the selloff began.

$SPY has been pinned to my master level of $313.30 pretty much all week

Similarly, we are seeing the same sort of pattern play out thus far. Big overbought move, followed by a sharp correction, then a gap higher and a pinning to $313.30. So far today it looks like we may even get another micro fade into the close. Again, covid spikes are happening in NY, FL, and TX and economic data has been less than inspiring. Nevertheless, the market is ignoring this due to options ex. Also notably tomorrow is summer solstice which is a known cycle event for markets.

I’ve been touting this wedge pattern on GLD for a few weeks now

GLD is threatening a breakout of this bullish wedge pattern as well. This could be a leading indicator for some type of reversal as it has traded largely inverse to the equity markets over the last 3 months. Possible near term price target for a breakout could be around $180.

Overall, please be careful positioning yourself in this market. Signs are telling me that a big move is coming next week.

About Aaron Basile
Day Trading and Swing Trading Ideas, Certified Personal Trainer, Power Bodybuilding, Avid Sports Fan (NBA, NFL)

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