Backing And Filling

Sideways action overnight after a big up day keeps the scenario of higher prices intact. Today and tomorrow could entail some backing and filling in preparation for another upthrust on the half-day Friday.

One small problem: not enough volume. Not only was the NYSE (which is the proxy for S&P 500 volume) light on the way down, it was even lighter on the way up yesterday. So this immediately calls into question whether the market has made a real low, or whether another leg down is required.

My suspicion is the latter, but not until an even higher bounce.  Others are calling for wave three down; until I see better looking waves I'm calling for a three-wave decline. If correct, the market is creating the second wave now.

Today I would love to see 1370 on a decline.  I still see 1400 as possible to the upside.

Note to self on AAPL calls: 550 weekly calls were available for hours last Friday (expiring this Friday) for $1.50. They closed $17.95 bid. When you make big profits on options, you need to keep playing your hand and parlay some of the profits back into your business by rolling up into cheaper options as the market trends.