S&P 500 Approaches Key Resistance Ahead of PPI Report: What to Watch Out For
Stocks finished higher yesterday, with a rally starting at 1 PM, as the market appeared to get a lift from the $8 billion notional delta value cover of that NDX for the QLYD ETF.
It looks like the party started a little bit before the buyback of the covered call started to have an impact. The good news is that it didn’t lead to the big market-moving rally event we saw when the buyback started in January.
At least from the look of things, traders were either front runners of the buyback and used the liquidity from the covering of the options to get out of their positions.
Or the options flow from the calls sitting up the 5025 level on the S&P 500 were large enough to hold the entire market in place; either way, the S&P 500 stopped between 5025 and 5030, which also completed the gap fill from Tuesday’s drop.
This takes us to today with the PPI report and the options expiration date.
It is anyone’s guess at this point what the PPI will be, but I think this report does matter because a hot PPI report coupled with a hot CPI report could mean that the PCE report isn’t as favorable as investors are hoping for, so we need to be watching this report a bit more.
The fact that the technical pattern for the S&P 500 held around resistance and formed what appears to be another rising wedge/diagonal triangle and filled the gap means that there is an opportunity here for the bears to take the ball back and move the index lower. But, if the index gaps higher today, then all bets are off, with the next major event not until Wednesday with Nvidia (NASDAQ:NVDA) earnings.
What was also odd yesterday was that fixed strike volatility for the S&P 500 for February 29 and March 15 was bid up.
It’s not something you typically see on an up day in
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