Options Outlook: Market Switches From 'Headline' To 'Sentiment' Mode

Scoreboard: The week ended on a sour note for the bulls after much promise. It's only fair though since much of the exuberance came from questionable rumors of Greek deals. Headlines are harmful to traders since they can ruin the homework. Once a headline comes out, the price action depends solely on the headline at hand regardless of its validity or sustainability.

SO we switch to 'HEADLINE" mode in addition to "SENTIMENT" mode. What's the difference? Market ranges derived from homework lose importance as they can get blown out by a headline. So traders make more room for error or trade smaller.

The causes for the malaise are not new; Greek woes are years old and just four months ago we knew that they kicked the can til now so here we are. Today the headlines are in the ticker tape so traders react. The blinders came off and traders did not like what they saw.
Focus points for the week continue to be 1) Currency, 2) Apple (Still stuck at 132 resistance), 3) Small caps (have the opportunity to break out, & 4) Financials. I also want to caution about oil. Friday, it spiked +4% higher and now sits at possible technical breakout level to add another 5% fast. I can guess that higher oil means lower some important sectors like the transports (which are already in trouble).
BEARS HAVE BEEN LAZY (FOR THE LAST YEAR) AND BULLS HAVE BEEN SHY!

Ranges played out again within our expectations with regards to open interest AND trends. Which means that the stalemate continues as bulls are too shy to breakout. We are still in the neutral zone where bulls and bears are free to roam. We have support below and resistance above. That's why Iron Condors are a decent way to generate income.

- SPY: Range tightening but nearing the bottom end rather than upper end of longer range trading. Bulls are being too shy breaking out.

- QQQ: Range is extremely tight and move coming at the vertical crayon line. The Qs aare still healthiest of the three with regards to the 6 months old range. So now it is possible that a rumor can fuel the move and not fundamentals. This makes the direction of the move more of a coin flip than fundamentally based.

- IWM: Markets still fighting of the "X" mark on chart. Outcome could be heavily influenced by rumors early in the week then economic data later in the week. optimism is waning.

- IYT: No let up in the selling pressure. Spells trouble especially with rising oil prices.

- VIX: I posted that it was too low at 12. Now it's threatening a breakout which could spell trouble for markets.

- PCLN: Possible downside especially if markets fall

- AAL: Better setup; green on a red mkt day. BUT still needs follow through to regain the prior support level (rectangle)

- BMY: Moves like this is why the whole pharma sector is off limits for selling spreads. They are prone to headlines EVERY and ANY DAY. BUT this could be a buying opportunity. Patience though at least through another tick.

- FB: next wk FB strong support at 75 resistance at 80. June undecided around 80 pin.

- Z: Yikes; move coming. Lotto ticket here. Flip a coin and buy a debit spread. CHEAP debit call spread if bullish or debit put spread if bearish.