SPY, QQQ: Traders Price In Limited Upside Next Week As Market Awaits Fed Decision, Inflation Data Release

Major Wall Street indices have so far traded flat this week with investors and traders maintaining caution ahead of the Federal Reserve's June policy decision next week. Traders are factoring in a status quo policy in June with a 72.4% probability the Fed will not hike rates this time, according to the CME FedWatch Tool.

Market participants are also watching out for the release of inflation data. The S&P 500 has gained about 11 odd points this week compared to the previous week's close. The SPDR S&P 500 ETF Trust SPY closed 0.6% higher while the Invesco QQQ Trust Series 1 QQQ gained 1.24% on Thursday.

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To get better clarity about potential support and resistance levels for these exchange-traded funds, here's a look at the options market outlook:

1. SPY: Options expiring on June 16 show significant open interest build-up at the $430 Call strike. This is interesting because SPY closed at $429.13 on Thursday and the open interest accumulation close to the level indicates traders are factoring-in limited upside for the ETF next week. On the downside, the $420 level may act as the first line of support in the short term.

2. QQQ: The ETF closed at $353.15 on Thursday. Options data show significant open interest build-up at the $355 Call strike indicating the level may act as a resistance in the near term. On the downside, the $350 mark may act as the first line of support.

Open interest levels only provide a fair idea about support and resistance. Any major news break or macro event could lead to significant movement in asset prices and a subsequent shift in open interest levels.

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