MomentumOptionsTrading.com Morning Update for 5/12/14
Volatility Could Pick Up This Week
The bulls came into last week with two days of May under the trading belt but needed another Monday win to get back on track. The bears did their best to crack lower levels of support on the open but the rebound into the close was a good sign a continued trading range would follow.
Tuesday was the 4th anniversary of the May 6 “Flash Crash” and the bears celebrated by getting their first Tuesday win in 8 weeks. The major indexes fell over 1%, on average, but rebounded on Wednesday after Fed Head, Janet Yellen, spoke.
The Fed statements she made pleased the market, overall, although she did say small-caps stocks may be a little overvalued. I talked about the divergence appearing midweek between the indexes and Thursday’s action back that theory up with the broader market rising and the small-caps (and Tech) slipping.
Friday’s action was bearish to start with a bullish close leaving the indexes within their yearlong trading ranges. There is still a chance for a breakout to higher levels but I mentioned it is starting to feel like now or never time. With May option expiration approaching this week (Friday), time could be running out for the bulls. (continued…)