Now that we are past the elections, focus has shifted back to the spread of Covid-19 worldwide. With numbers spiking again we are seeing more and more headlines hit about a potential shut down. So far the market has brushed it off with the continued rotation between index products masking any downside risk. Markets made new all time highs on Monday to start the week but have pulled back off those levels since.
We are currently seeing the tech stocks in the Nasdaq doing a lot of the heavy lifting preventing any significant damage from being done. However, we are again looking at markets that are very overbought going into the end o the week.
The all time high on SPY from Monday is our point of reference on the upside at 364.38. That will be an area of resistance to track if we get another push higher over the next few days. On the downside, we would love to see the 8 EMA tested down at 348.91. The volume has been quite good over the last few weeks but did show some signs of slowing down yesterday with only 58 million shares traded. This is certainly a sign of tired markets at these levels.
The ideal scenario remains getting a pullback over the next week or so down to test some support levels below us and build some energy for another wave to the upside going into the end of the year.
In this week’s midweek options update we take a look at where we stand from a technical perspective on key markets like SPY and QQQ as well as taking a look at new setups that we are tracking for the rest of the week on JPM, BAC, XLE, MSFT, LVX, and LYFT. Take a look at the video below and let us know if you have any questions that we can help with. We will be back on Friday for our weekly recap to end the week. Mike@netpicks.com