Editor's Note:

Will stocks bounce on Friday or will the market decline and post its seventh weekly loss in a row? Tomorrow is a quadruple-witching options and futures expiration Friday. Will we see more volatility or will the market quietly drift into the weekend? I suspect we'll see the later with stocks moving sideways, hugging the nearest option strike price.

We did see the S&P 500 tag its simple 200-dma and the 1260 level. Plus, the NASDAQ composite hit potential support at the 2600 level. There is probably decent chance that stocks actually bounce tomorrow. The small cap Russell 2000 index is also trying to bounce from technical support at its simple 200-dma and its lows from Monday. If that happens then the $RUT may have formed a short-term bullish double bottom.

However, even if stocks do bounce the intermediate trend is still down. We can use the bounce as a new entry point to launch bearish positions. Of course that requires waiting for the bounce to near overhead resistance or the trend of lower highs. We may not see a new bearish entry point tomorrow. It could take a day or two of the market bouncing before we see a new entry point.

If you feel compelled to trade tomorrow then I would be tempted to buy calls on the S&P 500, the NASDAQ, or the Russell 2000 index or their appropriate ETFs (SPY, QQQ, or IWM). If you do this would be a very short-term trade for one to three days and use a very tight stop loss under today's low. I'm probably least excited about the NASDAQ since the sell-off in RIMM tonight could have an impact on the NASDAQ.

Do not forget that while it's unlikely there is still the possibility that stocks experience some end-of-quarter window dressing in the second half of June. Whether that happens next week or the last week of June I can't say and it may not happen at all.

- James