Options Expiration - John Carter

http://www.tradethemarkets.com/freevideos Options Expiration We have had an amazing run in the S&P. We are now beginning to consolidate. While sloppy the first half of the day, the markets turned bullish by the close. I see us testing 1230. I favor an up move mostly because of options expiration, during which time anything can happen. Trader psychology tells me lots of people are short from the recent move to the mean. They put their stops above the highs at 1230, and in order for the market to go lower we must take them out. By mid next week I see us topping out and making a move to the downside. Transports are extremely bullish. Many traders assume the transports encompass only railroads and trucking and so disregard it. But also covered in the transports is shipping. A substantial amount of the world's goods are moved by container ship. Thus, transports will always lead. If the Dow makes new highs and the transports do not, it is red flag. For the first time since July, Goldman Sachs closed and remained above its mean, a very bullish sign. That financials are holding up is reason enough not to short the market. In the options newsletter, we set up a pin on JPM. At 33 we get pinned. I have been watching BAC. There is good open interest at 7. GOOG, however, lacks the open interest to get to 600. Bottom line is I am not ready to short the market yet. The main reason stock markets are behaving well is because of a lack of rallying in the Dollar. The dollar will not move higher till it closes above 77.85-ish. Afterward, we make new highs. I strongly believe this happens. I cannot say when but next week makes sense. JPY and Swiss Franc are two currency markets undergoing the most government intervention, and it shows in the ranges they trade in. Natural gas has not been interesting to trade in a long time. It is still not. I look for Gold to hit 1480. Short any rallies. It has formed a really negative pattern and now a squeeze to back it up. Same for Silver. It will test the lows and possibly go lower. Time for the bloom to come off the rose. HG is telling us the economy is not healthy. Copper is used in houses and cars, and if it is not being bought, then we should assume the economy is still not strong. This is one reason I expect the stock market to roll over. If the stock market does intend to go higher, AUD/JPY must move above its trendline. I doubt it goes much above. Corn looks solid, forming a very bullish pattern. Wheat has been quiet but is forming a squeeze. If the Wave Combo were above zero, I would buy now. It is so close to its lows, you could buy it, set a tight stop and play it up to 661 for a 30 point gain. John Carter is the author of Mastering the Trade and co founder of Trade the Markets. John Carter has been featured on CNBC, Bloomberg, Fox business channel, tastytrade radio. He is a contributor to thestreet and SFO magazine. For more videos in higher quality visit: http://www.tradethemarkets.com/freevideos

Comments

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