The market has traded on both sides of the ledger following yesterday’s losses but the range has been tight ahead of tomorrow’s fun filled action. There are a ton of story lines we could cover, especially the economic news, but let’s focus on Friday as it is November options expiration.
Tomorrow is setting up to be a whale of a day and here were our thoughts from Sunday night in our Weekly Wrap on the possible action:
“Friday November expiration has seen the Dow rally 7 out of the last 9 years with 2008 showing jaw dropping gains. The blue-chips surged nearly 500 points, or 6.5%, after moving from 7,552 to 8,046. We mentioned on Friday some of the wild price swings the Dow endured in 2008 and while we don’t believe the index will see a 3% or 6% single-day drop, it could happen over the next few weeks if there is continued weakness and the finger-pointing becomes middle fingers between the Republicans and Democrats.
While we have penciled in a possible rebound, we still believe our 5% targets for all of the indexes will trigger and we often remind you that once there is a breakout or breakdown out of a trading range there are fluff targets.” (END)
With all of the zombies in Congress meeting tomorrow, the action will depend on what news may or may not “leak out” during the day. With the weekend coming up, traders could be making big bets going into next week based on the possibility of an agreement, or disagreement, on the Fiscal Cliff.
As we head into the second half of trading, the market is lower after the bulls tried to clear resistance that served as prior support. Of course, it is at a lower level following this week’s pullback and could get worse if the bears keep the momentum.
The Dow is down 60 points to 12,510 while the S&P 500 is off a six-pack to 1,349. The Nasdaq is lower by 17 points to 2,829.
Subscribers, check the Members Area for the updates as we have action to take on one of our trades that is up 60% in 48 hours. Also, stay ready this afternoon to take action as we may issue New Trades or Profit Alerts.
Watch the S&P 500 into the close. If the index finishes below 1,350 it could be a sign Friday is going to a nasty day for the market…but a sweet day for our current put option trades.