SPX, SPY: As Volatility Abates, Here's The Expected Trading Range For The Week

U.S. markets reacted negatively to the Federal Reserve's policy announcement on Wednesday. Although the central bank signaled it might soon pause future interest rate hikes amidst the ongoing banking crisis, Chair Jerome Powell reasserted his commitment to bring inflation down to 2%.

What Happened: The Fed hiked the policy rates by an expected 25 basis points but major indices closed over 1.6% lower.

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However, considering that the volatility ahead of the Fed's announcement has abated to some extent, here's a look at where Wall Street expects the market to move this week:

1. S&P 500 Index: The index closed 1.65% lower on Wednesday at 3,936.97. Options expiring on Friday indicate the index has a strong resistance at the 3,950 level for the short term as is reflected by open interest accumulation on the out-of-the-money call strikes.

On the downside, the index has a strong support at 3,900 level.

2. SPDR S&P 500 ETF Trust SPY: The ETF closed 1.7% lower on Wednesday at 392.11. Options expiring on Friday indicate the ETF has a strong resistance at 395 and 400 levels.

On the downside, the 385 and 390 levels act as strong supports for the near term as is indicated by the open interest accumulation on the out-of-the-money put strikes.

It is noteworthy that open interest data only provides a fair idea about supports and resistances. In the event of a major news break or a prominent macro development, asset prices can move significantly, thereby causing a subsequent shift in open interest levels as well.

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