Bank On It

The S&P500 looked poised for a sharp pull back this morning.  Key support levels were broken, the $SPY was well under $270, $QQQ $170,  S&P500 futures fell through the key 2,700 level....

.... and then the market did what it has done best the last 8+ years.  It turned around.  Support levels were reclaimed, the negative aura that surrounded the market this morning, morphed into positivity this afternoon.

The S&P500 closed right near session highs, which is in stark contrast to yesterdays close near session lows:

The Bank stress tests came out after the bell ---->>>

Sure enough a bevy of buybacks and increased dividends have been announced sending financials sharply higher afterhours.




which means the financial ETF is likely also higher... and it is nearing that $27 level.

$XLF had some very bullish option action today:

Odds are strong that $XLE makes that $27 break tomorrow.  After the stress test the banks announced their massive buyback and dividend plans.  $20 billion here,  $26 billion there, $17 billion....  thats a lot of money buying back bank stock....

Buybacks, Buybacks, Buybacks ---

....and with financials trading near multi month lows, the buyback machines are going to get more buyback bang for the buck.

On to tomorrow.  Today's morning reversal took some of the negative wind out of the markets sails.  Even on Tuesdays session, the respite from selling was more of just sideways action.  Today... the action was up.

We are back over support across the board.  The key 2700 level held.  The VIX and VXX look to be breaking down yet again.  This market has had a habit of turning higher and rallying for days right after a sharp sell-off.  We had that during the "Italy" sell off at the end of May.

The support levels remain important, but today's rejection of downside could spell the end to the latest pull back.  Also let's remember financials have been in a tail spin.  Tonight's massive buyback announcements will bring the buyers back into the financials.

$QQQ back over $170 level today:

$SPY is BACK!!!    BACK in the channel again...... SPY is BACK!.... Back in the channel again......Back....

and the $VXX just couldn't break resistance today, failing yet again.

and finally the VIX.  Despite the market putting in new lows for the week this morning  the VIX did NOT put in a fresh high....

....we've read this story before, and it's almost always had the same ending.  A move back under 15.00 for the VIX and higher equity prices.

Anything can happen between today and the open tomorrow.   However,  after today's morning reversal, and the after hours bank buyback frenzy the odds favor more upside into the end of the month.

Have a great evening.




Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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