Quad Witching And Extreme Emotions

The S&P is at an interesting juncture. It is at the 78.6% retracement of the move from 1230.71-1136.07. It is also just below an internal trend line at about 1210-1213 depending on how tightly it's drawn.

I was surprised to find the futures down this morning. They have since recovered. I would have thought them to be higher. The market may therefore be showing the first sign of fatigue. It started, internally, late yesterday as down volume started to pick up.

Remember that S&P options closing prices are determined in the morning. Judging by open interest alone, it seems there were far more puts outstanding than calls. Thus the game is to get the market as high as possible for expiration so that greater number of puts go out worthless.

Once they expire though, the underlying bid can quickly dissolve. This remains to be seen though. As of now, it is only a possibility in line with its current price level.

Certainly this is a market overdue for at least a retracement. But I do see higher levels in play that I cited yesterday, 1220 and 1230.71. I always try to find what looks like an extreme level because the market itself is extreme -- extreme emotions are what make it move.