12 Charts That May Show A Break Through In The Options Market

Scoreboard: The week ended strong for the bulls and scored a green week for the broader indices after two red ones. The small caps strung two green weeks in a row but are no longer leading up like they were up until 9 days ago. Nothing changed in my thesis this week: Fed is still raising rates with no QE in the US; Eurozone is still mired and are working with EQE; China still mystery and now bubblicious; Japan a scary experiment; Geopolitics still scary; Oil is still depressed, Grexit looming, etc. Having said that I need to add a word of caution: You've heard me say that markets are trading 'sentiment.' To this I have to add my own sentiment: The current situation is starting to 'feel' like when markets broke through the 1999 and into the 2000. The bulls failed several times then busted through it like a hot knife through butter. I don't personally 'trade' sentiment but I have to make room for it. I was asked if I thought that this earnings season could be a catalyst to push us -one way or the other - out of this "meandering zone"? My answer: Earnings are likely to be okay but companies are likely to be modest with their forward guidance. However HOW the markets will react to these earnings releases is anyone's guess. This makes it a coin flip situation with regards to the direction. So yes, it could happen but until then I continue to trade the ranges that the markets give me. We may get better clues on the direction once the big tickers start reporting (Apple, Google etc). Lotto of the week could be long Apple on a super spike. Calls could pay big in the next two weeks. Ranges: So far we've cast perfect range limits with regards to open interest AND trends. We are still in the neutral zone where bulls and bears are free to roam. Friday pushed markets to the upper range of such limits so next week could be pivotal for bulls. So far the meander created a nice iron condor opportunity but we need to start making wider room just in case my 'feeling' aforementioned has merit. Traders are playing 'chicken' with the negative catalysts. Meaning they know there is bad news coming but they will ignore it until the very last minute. Until then they they are willing to risk it which could be bad for bears. The open interest peek into next week's set up suggest another bullish platform from which the bulls can mount another assault at recent and all time highs; they just need to step into it. Yellen fueled a spike mid March but fizzled maybe earnings can fuel the next rally. - SPY:

-QQQ: The Nasdaq outperformed this week on the backs of concentrated big moves. It would be better for the bulls if the strength comes evenly distributed. But still they threaten to break out.

- IWM: Up until two Thursdays ago just before (Good Friday), the small caps were leading up. Since then they've stopped leading up. They've lagged most of the time and were in line a couple of days. IWM trading a very tight rising wedge (orange pattern) inside an ascending channel (yellow pattern). Each candle this week touched both upside and downside trend lines of the orange wedge. This makes it dangerous on either side: bulls for a breakout and bears for a breakdown. Caution is warranted for both.

- IYT: While it put in a green week it still set a lower high and lower low. Friday's performance was strong but not yet out of the woods.

- VIX: I'm not one to trade the VIX but at level now worthy of note.option expiration shenanigans early next week too.

Variables to watch: Politics (Middle East); Fed (too much Fed speak); Currency; EQE progress; OIL (failed breakout in a 'rigged' market); Bonds & 10yr yield (ranges tightening and moves can be coming soon).

Tickers: (some charts are not as of the close) - CAT: Misplaced strength on back of GE 'Fengineering' and spike in China perhaps. I need to see it follow through with more green. Until then I am not as optimistic on CAT as Friday's price action.

- CMG: An incredible move (+32$) out of nowhere. Broke upper trend limiit so could reach 710 and gap fill. Earnings soon could be the catalyst. Debit call spreads could pay.

- BUD & Tap: Puts could pay.

- GPRO: If breaks out oftsl dashed green line can reach for 55+ fast on technical basis alone.

- TSLA: Strong bounce this week on headlines. A short squeeze followed. There is a good chance that the squeeze already run it course. So this leaves the need for more headlines.

Check out the video below for a full recap of this week's options outlook: