Monday’s Options Alerts
Friday’s market marked another
light-volume session of distribution. With
no particular catalysts before the weekend to spur investors into buying, the
market trended lower throughout the session as the ETFs all closed down at their
worst levels of the day on either side of the 2% mark.
As said, volume was once again light, but don’t
expect this to last much longer. Critical supports are being tested in the
market’s run up from the October lows. If the markets fail at these levels, many
of the market participants who jumped in during the first half of November will
surely be rethinking their asset-allocation strategy. Nov. 6 saw a huge
surge in volume as the market ran higher. After that date, Nov. 11 through Nov.
13, depending on the ETF, became the all -important support pivots for the
uptrend. We are now testing those levels in the DIAs and SPYs, with the QQQ’s
and semiconductor HOLDR
(
SMH |
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Chart |
News |
PowerRating) not too far behind.
The
(
$VIX |
Quote |
Chart |
News |
PowerRating) and the
(
$VXN |
Quote |
Chart |
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PowerRating) both finished up on the session, with the VIX up
nearly 10%. No CVR signals have been
triggered as we test supports in the ETFs. Interestingly, even though the two
volatility indices moved in the same direction today, the VXN is still defying
conventional logic, as it is still near its recent lows, whereas the VIX is
close to testing recent range highs.
My own thoughts on this are that the bears
have got their claws in the bull, with the divergence in these two instruments
and a couple of other sentiment indicators still a bit too bullish for my
comfort zone. My bet is that the divergence gets resolved to the upside with the
VXN turning its bullish tail and following the lead of the VIX. As always,
price and volume (remember that?) are the primary decision makers. When
we do see volume return, it should look like the running of the bulls in
Pamplona. Whichever direction the market turns next, it will certainly be much
more crowded when trying to get out of the way.
Have a good weekend.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 34.15 | Up +3.07 |
None |
8.58% Above |
Not at Extreme |
| VXN | 46.71 | Up +1.35 | None | 2.01% Below | Not at Extreme |
Abnormal Options Volume — This list
includes both percentage movers that are normally associated with an increase in
options activity, as well as stocks that have unusually high activity and / or
technical situations,
reflecting increased speculation of a potential price move.
| Name | Symbol | Net % Change |
Volume | Avg. Volume |
| Amazon.com | AMZN |
-7% |
31119 | 10577 |
| Pixar | PIXR |
-5% | 3531 | 485 |
| Expedia | EXPE |
-3% | 9912 | 3843 |
| Manhattan Associates | MANH |
-3% | 3263 | 337 |
| Wellpoint Health |
WLP | -1% |
3051 | 1160 |
Stocks With Spikes in Implied
Volatility — Stocks with Increases and Decreases in implied
volatility compared to previous day. Candidates are then screened qualitatively.
These lists represent those issues that carry a blend of liquidity and/or
technical setups that might deserve further notice.
Spike Up
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Diamonds | DIA |
28.2 | 25.9 | 39 | 18.5 |
| Starwood Hotels |
HOT | 50.9 | 45 | 73.4 | 27.6 |
Spike Down
None today.
Please use stops on every trade!