Have A Twinkie

The NYSE NEW 52-WK HI LO DIFFERENCE extended deeper into the red yesterday, reaching -245. Don't fret, because in October 2011 it reached -1165. But the market may be nearing a zone where buyers come in.

The futures have just at this moment peaked above yesterday afternoon's high after peaking below yesterday's lows. This may be the early stages of bullish engulfing whereby buyers overwhelm sellers. Yes, it's option expiration today, and price is likely being pushed to areas where weak hands emerge. But price action is price action.

I posted the screen shot below on Twitter yesterday. %SP500 ISSUES ABOVE 200, 50, 20DMA. Notice each reading is back into a buy zone last reached in June, especially the 50 and 20-day. Bottom right is the S&P index itself.

It is for these and many other reasons that I was a buyer of SPY 135.5 calls yesterday, in addition to the earlier tranche of 136 calls. On yesterday's pop in the afternoon I was able to use 135.5 puts as a hedge and booked nearly a 50% gain into the subsequent new lows. But I missed getting a new tranche of 135 calls. Right idea perhaps, but just a second too slow.

There was also a remarkable ADVANCE-DECLINE divergence at yesterday's lows that usually pays well when noticed.

I still see a value area around 1368-1370 along with a 61.8% Fib retracement. Below is 1336-1346 zone with multiple Fib levels coinciding there. It's option expiration with a great many on the wrong side of the boat. As always anything can happen and probably will.

Case in point, the venerable Twinkie. Virtually indestructible (it could be eaten years after its sell-by date) it's disturbing that it took a union to finally do it in.

“We deeply regret the necessity of today’s decision, but we do not have the financial resources to weather an extended nationwide strike,” Hostess CEO Gregory F. Rayburn said in announcing that the firm had filed a motion with the U.S. Bankruptcy Court to shutter its business. “Hostess Brands will move promptly to lay off most of its 18,500-member workforce and focus on selling its assets to the highest bidders.”

Hostess said its wind down would mean the closure of 33 bakeries, 565 distribution centers, approximately 5,500 delivery routes and 570 bakery outlet stores in the United States.

It's Friday. Have a Twinkie.