The Week in Review

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Trader,
If you told me that I would say 20 Million jobs lost in a month and NDX up on the year in the same sentence, I would say:
You are CRAZY!
But that is the case, we have 20 million jobless and an NDX that is up on the day.
So the question is, how is this happening?
Two reasons:

  1. The market appears to think what we are seeing is temporary. And with interests rates at zero are jumping into the TINA Trade (there is no alternative)
  2. A top heavy market, in that 5 stocks are 20% of the S&P 500. As money flows into the market it is becoming more and more concentrated….

A concentrated market does not act like a normal index.
With the QQQ getting up on the year, we saw option markets move to ‘risk on.’
In this we mean there were lots of option sellers.
Now that the market has recovered we are starting to see covered call sellers return.
This makes sense, because there is still juice in options, notably in upside calls.
Looking ahead to next week, it will be really interesting to see what happens at 3000.
It appears the 200 Day Moving Average, the 100 DMA, and 3000 are all going to meet at the same spot (3000).
Will that be real resistance when money dumps stocks, or will it be a blip.
In truth, it depends less on the level and more on the Big 5 stocks:
MSFT, AAPL, GOOGL, AMZN, FB
With every day the S&P 500 becomes more like the QQQ and less like the Dow Jones.
The market is no longer the market. Its time to view the indexes in a different light.
Your Only Option,
Mark Sebastian
P.S. – As the market itself changes, it becomes important to know exactly how to trade individual stocks for extra gains, without having to worry about fancy technicals, complicated fundamentals, and complicated options spreads.Click here to learn why you only need volatility for consistent trading success.

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