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Down, up, then down again

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Today's session has been a roller coaster ride for equity traders as a morning low trade reversed higher on news of Iraq U.N. concessions, but has since reversed course for a lower trade as the session nears an end.

The NASDAQ Composite (COMPX) 1,350 holds a gain of less than 1 point, while the smaller cap Russell 2000 Index (RUT.X) 375 does the same, but its the larger cap stocks in the Dow Industrials (INDU) 8,336, which now shed 50 points along with the S&P 500 Index (SPX.X) 875 -0.79%, S&P 100 Index (OEX.X) 446 -0.8% and NASDAQ-100 Index (NDX.X) 998 -0.33% (OK, lots of smaller cap names in the NDX too now) that have given back early afternoon gains.

Energy sectors extend their losses on Iraq concessions with the Oil Index (OIX.X) 245 -2.68%, Oil Service Index (OSX.X) 78.93 -4.12% and Natural Gas Index (XNG.X) 131 -2.05% trading lower. December Light,Sweet Crude futures (cl02z) $25.24 trade down 66 cents and have just broken below July support of $25.23.

With little threat of inflation and near-term lack of concern regarding war efforts with Iraq, the Gold/Silver Index (XAU.X) 65.65 -2.89% challenges the energy components for sector loser as December Gold Futures (gc02z) $318.90 fell $5.80 or -1.7% to close back below their trending higher 50-day SMA. "Gold bugs" will keep and eye on the contract over the next couple of sessions to see if 21-day SMA support at 317 holds, if not, gold stocks become vulnerable with an XAU.X downside target of 60.00.

Treasuries finished the session with modest price gains. The benchmark 10-year YIELD ($TNX.X) ticked lower to finish its session with a 3.838% YIELD. Action in Treasuries was relatively nonexistent today, when compared to the intra-day volatility witnessed in stocks. This observation may hint that shorter-term equity traders will look to take advantage of intra-day equity trades when bonds remain pegged near unchanged levels or see price action DIVERGE from equity price action.

Index trader should remember that tomorrow is index expiration and the major indexes are near some "peg" levels and round numbers where we may see some settlements.

The QQQ's are a favorite among traders, but a quick look of the NASDAQ-100 Index (NDX.X) 1003.95 +0.2% has it right at a nice peg level of 1,000 and may have a short-term QQQ speculator on the sidelines for November expiration. A trader hold QQQ calls/puts most likely looks to close out positions on intraday swings either side of NDX 1,000, which correlates with a QQQ of $25. On Friday, subscribers will remember comments of closing out a QQQ November $26 put near the $25 level as risk into expiration left little time for error. QQQ options will expire on Friday.

Jeff Bailey

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