Market Overview

03/20/11 Weekend Update & Outlook - Volatility Is Back!



Broader Market Weekly Performance:
Dow           -1.51%
S&P            -1.92%
Nasdaq     -3.47%
Russell     -1.02%
 
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MARKET UPDATE:
"Meltdown"  is the word of the week as it accurately describes many things:  Japan's nuclear reactor, Global markets, and the US Dollar.  The dollar in fact hit 2008 lows set during the sub-prime crisis.  Oil rose back over $100/barrel this week as did gold rising above $1400/oz.
 
Tech got smashed this week on supply concerns that Japan's destruction may create long lead times on electronics components.  AAPL's iPad2 has many parts produced in Japan and may encounter delays in production of the components.
 
Volatility will remain this week but I think there is definitely strength in the market.  The Japanese and Libyan headlines provided an opportunity for a pullback this week that will keep the rally healthy going forward into the next earnings season.  SPY bounced nicely off support and the 100 Day Moving Avg at 125.  I expect that level to hold but may be revisited before the market heads back north again.   
 
Areas of support remain at S&P 1275, 1260, 1250, and 1225. Resistance remains at S&P 1310 and 1350.
 
What are your thoughts on the market?  Place your comments below!
      
BOOKINGALPHA UPDATE:
During this week's slide subscribers were forced to adjust a SPY put spread out to March Quarterly expiration and close a GOOG put spread for a loss as the short strike of the spread was threatened.  A new far out of the money SPY put spread was also opened to extract spiking premium from the jump in volatility.
 
As stated previously, we are dialing back risk at BookingAlpha in response to the shifting market dynamics.  We have been actively, and profitably, trading weekly options spreads for the last few months but the weeklys no longer offer a comfortable risk reward.  We are migrating back to our core strategy of employing further out of the money spreads on the indexes for less volatility and higher probabilities. 
  
Stay tuned......happy trading......and thank you to everyone for supporting BookingAlpha!
 
What are your thoughts on the market?  Place your comments below!
 
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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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