Market Update

 DIA 10 min positive divergence

 IWM 2 min positive divergence, also note the 3 depth chart.

 IWM 5 min positive divergence

 IWM 10 min relative positive divergence

 QQQ 5 min positive divergence

 QQQ 10 min positive divergence

 The 15 min is still leading negative.

 SPY 1 min positive leading divergence

 SPY 2 min positive divergence.

As you can see, we have initial signs, but they are sporadic and spread throughout different timeframes in different averages, there needs to be more consistency.

Two under currents to this months end of month action are 1) The end of Q3, funds and Wall Street tend to try to pump the market, many of you have also heard of window dressing, especially at a quarter's end when new prospectuses will be going out.

The second under current is an unusually late options expiration day, which is this week. Typically the market pins the options to make as many as possible expire worthless, being that most traders are buyers of options and Wall Street tends to be sellers of options, so in pinning the most contracts to expire worthless, Wall Street gets to keep their positions as well as the premium.

These are two undercurrents that are a dichotomy or opposed to each other in their intended effect on the market. The only thing that I can think of with regard to quarter's end is the T+3 settlement rule, but that would be on trades or window dressing, not actual performance which will run right through the end of the month. Funds right now aren't doing well as a general statement, they really can't afford redemptions so I would think they would seek to juice their returns as much as possible, which is at odds typically with options expiration. Interesting dilemma huh? But only for us, they already know the answer.

Here is the options chain for the SPY starting with the Calls and followed by the Puts.

 It would seem maximum pain to me is not at $117/118, but further out at $119-$122, which means the market could rise up to about $119 and still pin the highest open interest AS OF TODAY.

Here are the Puts

Again, maximum pain doesn't look like it usually does, around the "in the money mark", but rather lower down at $110-$115. If the market were to rise from here or even hold steady here, these puts with high open interest would be wiped out. It seems to me that Op-Ex shouldn't be a major factor over the next two 2 days, at least for a modest return to a rally.