Welcome To the “New and Improved” Option Trading Blog!

March 5, 2008
Author: Peter Stolcers, Founder of OneOption

Surprise! Those of you who read my blog on a regular basis have the first look at my new blog. This week, I will make a formal announcement. I would like to thank my web designer Reese for all of her hard work the last few months. We've added many new features and the information is much easier to access. As you know, I don't litter my site with advertisements. My motivation is traffic. The larger my audience, the more content I add. I hope you like the new blog enough to spread the word to other traders. Now let's talk about this schizophrenic market. Yesterday, investors were shaken by weak foreign markets and rumors of a larger than expected write-down by Citigroup. Then, Intel warned of lower profit margins. The SPY broke below critical support at 133. The “bid” to the market disappeared as buyers put their wallets away. We hit an air pocket and it looked like the next down leg was about to start. Late in the day, an intraday reversal pushed prices back above the critical 133 support level. News that Ambac was close to getting the capital it needs to maintain its AAA credit rating fueled the market. This trump card saved the market two weeks ago and as I write this blog, the stock has been halted. Today, the market is adding to yesterday’s gains. The ISM services number came in at 48%, and while that is still below the 50% desired level, it is a vast improvement over the 44% number reported last month. If you recall, this report weighed heavily on the market last month. This afternoon, the Beige Book will be released. It will reveal economic activity across the nation. Today's chart shows deteriorating conditions. I have highlighted a series of lower highs. You'll also notice that the SPY 133 support level is being tested with greater frequency. If the market can't generate a sustained bounce to the SPY 139 level, we will soon break support and test the January lows. On the other hand, if the market can stage a decent rally, there is a chance that a base is forming at this level. The Beige Book this afternoon could extend the rally or it could strip away today's gains. Friday's Unemployment Report will swing the market one way or the other. I am inclined to believe that it will come in weaker than expected. The jobless claims have been increasing at over the past few weeks and that should translate into higher unemployment. I suggest keeping your powder dry at this juncture. Over the last few days I have suggested taking profits on commodity stocks. If the market is able to rally, get back in on those plays. If the market closes below SPY 132, short financial stocks. image

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