DailyPlay Updates – March 17, 2023

Investment Rationale

With First Republic Bank and Credit Suisse getting backstopped by cash injections from other banks, investors were quick to bid stocks back up, and yesterday saw the SPX close almost 70 pts. higher and safely above the key 3864 weekly bearish Propulsion Momentum level. Barring a close beneath there today, the SPX remains in a trading range bounded by that level and 4148 on top. Traders continue to have the edge over more confirmed bulls and bears, who this year have been beaten up badly by having stubborn opinions.

Propulsion levels have been golden since last summer. See the 4 highlighted rectangles below:

SPX – Weekly

Today is a major option expiration. Open interest in strikes even remotely near yesterday’s close is massive, but the single largest are in the SPY $390 puts (107K) and the $400 calls (103K). Many hundreds of thousands of options will go off the board today worthless – another reason why selling options is the preferred way to play by most smart money in the business.

We have on three option spread positions that expire today (i.e., SPOT, GLD, and ABBV). Yesterday I wrote to you to make sure that you are out of them by this morning.