DailyPlay Update – January 6, 2023

Jobs numbers didn’t give bulls the look they wanted, and stocks again came off to now finally see the SPX close beneath the 3814 level. A close back above there today probably doesn’t make yesterday’s breach meaningful, but another down day today would not be a good look for recent buyers. A close beneath 3769 today would be a bigger problem without next week materially rallying.

Today is the first Friday of the month, so it’s the big employment report day for the market. It’s a possible make or break day for the market, and it’s the bulls who need to prove themselves because they are continually fighting the downtrend and the onus is on them to show why there is any merit to that approach.

Today is also a weekly option expiration, and when it comes to the SPX, the nearest highest open interest strikes are the 3825 calls (1604) and the 3825 puts (6736). The 3850 calls have 8244 contracts set to expire worthless, and the 3750 puts have 11,545 contracts still open also set to go out worthless. It will be interesting to see if either the 3850s or 3750s get targeted late in the day.

I may very well end up using what happens today to make portfolio changes on Monday, potentially reducing or fully exiting bullish option positions I’ve given you if today dives.

As a heads up, if the GLD high from this week ($173.30) stays the high through today’s close, the Conversion Line will move up to $166.76 next week. We’ll look to play a pullback to that level by then selling the March 17th $166/$162 put spread.