After a new low yesterday, we popped back inside the week's range by the close. Today is Quadruple Witching and I think the market will remain in the range, still 1265-1292. This morning's pop in the futures, I feel, is expiration related and not a new trend. But the market could move considerably higher before this thesis is called into question.
I'll be watching a trend line on the S&P cash at around 1277.50 as a tell whether the index wants to reach for the upper end of the range at 1292. For my current position, the higher the better. OEX 570 calls expiring today hedged with SPXU from the close yesterday, plus another small hedge in the pre market with SDS. I'll have to be nimble on both sides.
The pattern since June 6th looks increasingly like a megaphone, with wider and wider swings. Classically that can signal a market that is out of control. So while my near-term bias is higher to relieve a extreme oversold condition, I doubt we've seen the end of the move.
There is news about yet another fix to the Greek debt situation that has Europe much higher today. Doubtless the good feelings are being felt here temporarily in the US, but it's just more Keynesian fantasy. I doubt we've seen the end of this one, either.
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