Expiration Strength Likely to Limit Declines

Weekly Continuation

Nine consecutive contract months have been bid into expiration, with the last six have traded a low between the 15th and 21st. This week’s low traded on Friday the 23rd represents the latest for an expiring month since June traded a low on 05/24 only to rally during its last three trading days. Failure of expiring January to rally before it goes off the board will likely suggest another character change for the market and weakness into at least early ’22.

Multiple technical violations have been discussed as they occurred over the past couple of months. Together these have spelled the end of the year and a half uptrend. That said, also note that on a monthly basis the long – term uptrend remains in effect and the coming summer strip remains above its 40 – week SMA The decline from the Q4 high was exacerbated by the liquidation of open interest and looks to be overdone just as the rally that extended more than 50% above the 40 – week SMA, last fall was.

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