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What IF?

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Options expiration weeks are notorious for going against the prevailing trend. Options market makers do not like losing money and seem to have deep pockets and methods to move the market. Using SP 500 as a surrogate, I noticed that put options have a great deal of open interest with a strike price in the 1320-1375 area, with one big bump at 1400. The main open interest in options calls for the SP 500 appears to be in the 1390-1450 area, with one big bump at 1350. The options market maker plan may be to squeeze out puts worthless by levitating the market above the strike price, and don’t have to worry about options calls to much because the main pack are mostly above the 1400 line.

^GSPC Options | S&P 500 Stock - Yahoo! Finance

Institutions bought an amazing 1148 millions of Apple Inc. Friday, on weakness (-4.49% for the week). In other words, 1.48 billion in change, so what do they know?

Mike Burk, in his weekend “Technical Report for April 14, 2012” comments for the 4th year of the presidential cycle and returns for the SP 500 for the third week of April. The period is 1992-2008 for Monday-Friday as follows: -0.31, 0.56, 0.28, 0.52, 0.1, and overall average 1.15.

Technical Market Report for April 14, 2012 | Mike Burk |

I am not sure if the Dow and SP 500 are building right shoulders on the charts or not. If they are, the market can’t fall too much more yet, and SP 500 needs another shot to the 1400 area. The ABC assumed correction pattern from the SP 500 1422 high may also subdivide, so abc might equal A and abc for B and so on. So, the next several sessions will be interesting. I have a TSP trade remaining for the month and would like to use it, and even though my trend system is not on buy (other than F), I might take a chance if an options set-up is right. I would prefer a drop to 1340 in the first two days, and then play the bounce. For the primary correction, I am not sure if it will be over by the end of the month. A SP 500 time and price estimate, based on cycles, shows a bottom somewhere around 1290 near the turn of the month or up to two weeks later.

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  1. Dutchy's Avatar
    Thanks Uptrend for the very interesting commentary above... A lot of very good information!

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