DOW, S&P, Nasdaq All Up

The Dow increased 4.7% closing at 8979.26, the Nasdaq was up 5.5% to finish at 1717.71, and the S&P was up 4.3% to finish at 946.43. Leading sectors Coal and Consumable Fuels +13.3%, Education Services 13.2%, Steel 13.1%, Oil and Gas Exploration 12.1%, Gas Utilities 11.4%. Gold will surely make it to the lagging sectors.

Though the rally came on more than average volume, the up volume wasn’t impressive at all. The new lows also increased. Net net, poor market internals in the face of a “strong” reversal, far short of saying any strong bounce.

I earlier mentioned my bias via alerts on InvesCafe

I am worried. There is so much optimism that Friday was bottom. It will be nasty surprise to many if it wasn’t.

We are seeing almost thousand points move every day for Dow. VIX was at record high (over 80%) when I sent out an alert mentioning that “theoretically we should see a rebound” but don’t be surprised if this IV also represent a big crash coming. The moves are becoming bigger, the volatility is higher, the news is bad and so one. I wonder if this is a precursor to any big crash on the way.

On the other hand, Friday low might prove to be low for this bear market as well. So I want to be ready. There are some interesting value emerging in this market and my list for value stocks is growing each day (You can check my current list if you are an OPN subscriber). I would like to do pre-work now so I can move funds at the confirmation that a bottom is in place.

Google announced good set of results and hence up GOOG +10.9%; AMD +10.9%; IBM +2.2%… low ones are ESLR -16.5%; TPX -12.0%; LEG -11.2%; ESLR -10.6%; PMCS -6.1%; SYK -3.2%., CBI -6.2% ,CMI -5.3%

Tomorrow is US equity Oct’08 option expiration, so expect volatility, this is also a time for maximing leverage as all the OOM options are left with is the IV and time value which reduce to zero by the end of the days if those are still OOM.

Have fun and profitable trading, OP





2 responses to “DOW, S&P, Nasdaq All Up”

  1. Xerces Avatar

    Hey OP,
    You are talking about a potential big crash due to high VIX (if the rally did not occur).
    If that happened what do you think would be the next support?
    I’m not very fluent in TA, but it seems that SPY could drop to $80.80 – lowest in 2002. Below that I don’t know.

  2. A.J. Option Trading Avatar

    Market has been crazy, for sure. Looks like an up day today because of Bernanke’s announcement of more government stimulus. But prices could easily continue dropping. Fundamentally, the financial system still has big problems.

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