Wednesday’s Options Alerts
The ETFs finished in the
green today after technical bounce from oversold conditions. When
we last left off, all eyes and ears were tuned to Radio Baghdad. Today, the
market’s eyes and ears were tuned to testimony by the FOMC. The averages held
onto their early gains in anticipation of the news, and resumed their climb
after the meeting, as the path of least resistance was up in the final hour of
trade.
Technically, the markets have “shaken the
trading tree” from highs notched not too long ago. The ETFs
experienced one last, rather unexpected shake yesterday, which, even after four out of
five down sessions, would prove to be a nice fall, had you been hanging on to one of
the market’s branches from Friday’s prices. (FYI as I stated in Friday’s piece, I
had started my climb back up the tree, and found out by Monday that some of the
branches where I was perched were still weak.)
The lows established yesterday, believe it
or not (charts don’t lie) still have the ETFs in an uptrend as evidenced by the
pivot lows from Nov. 11 or 13 (depending on index proxy). Today’s action
was definitely light in the volume department, as an inside day in the major
indices with mixed internals dictated trade. The bears have had what the bulls
like to call a “bear raid” in recent days, and today’s action has the
looks of more short covering than anything else.
As stated, the uptrend is still
intact as the averages reclaimed their 38% Fibonacci retracement levels with
today’s trade. The next percentage move will be very important. If the rally is
to resume, the ETFs will need institutional money (volume) to rejoin the party,
not just shorts covering. Volume is the food this baby bull will need if it’s to show us that it has real legs
underneath it.
The
volatility indices
(
$VXN |
Quote |
Chart |
News |
PowerRating) and
(
$VIX |
Quote |
Chart |
News |
PowerRating) were both down today. No
fresh CVR Buy signals triggered this evening, but a CVR 3 did carry over from the
previous session. Looking at the volatility charts on the daily graph, my
observations based upon the technical picture does suggest exhaustion after a
nice run up off the lows set two weeks ago. The run up that we’ve witnessed, and
the subsequent sell off in equity prices, goes to show once more that trends
persist longer than anyone thinks possible (ouch.). It also reflects the adage,
“bears make money, bulls make money, and pigs get slaughtered.”
Good
luck in your trading.
Points of Significance:
| Volatility Index |
Close | Net Change |
Signals/Direction | % Above/Below 10 Day Moving Average |
Significance |
| VIX | 31.67 | Down -2.80 |
No Signals |
0% Below |
Not at Extreme |
| VXN | 51.75 | Down -1.23 | No Signals |
1.13% Above | 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,
reflecting increased speculation of a potential price move.
| Name | Symbol | Net % Change |
Volume | Avg. Volume |
| Forest Labs |
FRX |
-3% | 8322 | 2120 |
| Medimmune | MEDI |
-2% |
18408 | 4160 |
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
None Today
Spike Down
| Name | Symbol | IV | Previous IV |
High IV |
Low IV |
| Diamonds ETF | DIA |
26.6 | 29.3 | 39 |
18.5 |
Please use stops on every trade!