Bulls Leave Money On The Table Despite A Week-End Win

The scoreboard for last week was a win for the bulls. They capped the week with a strong Friday finish. However, the bulls left a lot money on the proverbial table that day as they closed off the earlier highs. In fact the Nasdaq closed towards the lows of the day. This had a lot to do with a strange whoosh down in Apple with minute until the close. Believe it or not, the rally was fueled by a Greek headline. What's even crazier is that there may also have been a small drop to a non-US Ebola headline. This week looks to be set up with the opportunity for the bulls to have a good base from which they can mount another assault. There are bullish technical set ups for another 20 to 30 S&P points. However, markets are trading more on sentiment rather than fundamentals and sentiments are fragile. At these altitudes, traders will hit the sell buttons at the first hint of trouble. Investors are best served booking profits often and buying some protection. Well balanced portfolios will hold up best if things head southwards. Case in point is how fast Apple dropped in minutes on Friday. Regardless of the reason why, it shows how quickly unexpected 'situations' can unfold and without warning. Almost 10 billion in market cap erased in minutes. During sentiment trading, be careful what you chase. Investors should stress-test their portfolios for different scenarios: First traders should quantify what will happen to their overall folio if markets drop 20% quickly. Then they should also know what risk they carry if markets rallied another 10% from current levels. If the findings are alarming in either case then the portfolios need more balancing. This should be goal number one for every trader at these all time high levels. * The Apple 'Fri-crash': (Each candle is a minute - the fatter the bigger the volume; P.S.T.)

​* On the bright side, here is Apple in the DOW heat map (not at the close so wasn't red yet):

Observations: * Almost everything is at all time highs. Even the Nasdaq came with 20 points to their all time highs. So it's becoming harder for bulls to justify NOT booking some profits up here.

* Apple represents the dilemma with chasing these markets higher: The company's a gem with fantastic prospects. Yet at these levels it goes against most DNA to jump aboard long. To high to chase and too hot to short. * Major healthcare wins (CELG and BIIB) yet IBB almost closed red. Money flowed out of ISIS and alike (small caps weakness) to pour into CELG & BIIB. This is probably the cause to the early lag in the small caps. * A friend of mine in the roof construction industry (new homes) told me his pipeline for new business recently fell off a cliff. I would be interested to see if the next new home economic report confirms this input. Also how markets will react to it. Bad news could be good news. <><><> We keep rallying on the elimination of bad news; eventually we will need new bullish fundamentals on which to rally. * VIX -7.4% on markets +9% is overkill. So the size of this sigh of relief is worrisome. Bulls will be too quick with the trigger if trouble arises. I know they can't see it now but traders are always open to the blindside especially when everyone is on the same side of the equation. Variables: * The Fed: with a couple of hours to go, markets were drooping until Fed Evans spoke in his usual dovish tone saying that he'd like to push the rate hike into 2016. His words reversed the droop. We still have two potential major market moving events: 1) when fed actually sets the date for the rate hike. 3) When rate hikes actually kick in. Also Yellen got even more bullish by lowering the bar; meaning she reserved the right to ignore the "employment good news" even further before she is pressured to raise rates. My interpretation of her words is that the Fed doesn't know what's coming so they resolved to react not be proactive. * Euro: Bounced hard today against the dollar (all currencies did too). * EQE: Started 3/9. Data dependent. So good news bad news. It could end earlier than its Sep 2016 end date. * OIL: Green today but still mired under 50 and closer to 45. The "war" is now in phase two. 1) damage the price to kill new entrants and weed down the player's field. 2) who's is going to cut production to prop prices up? Saudi this week said it wants the US to cut so that Opec doesn't lose market share. * TLT: Bonds are at interesting level and can break out closer to recent highs. This should cause a challenge to markets but recently markets have ignore it sporadically like today and rallied with green TLT. Range is tightening and could soon see either 135 or 127 on a trend break.

* TNX: 10-year rates fell hard again today and now firmly under 2%. This should under normal circumstances scare bulls but not today.

Ranges: All the ranges are within Open Interest expectations and trends. * SPY: Still lower than 2 days ago day high tho still climbing. Volume is strong. QQQ: Still lower than the recent high from within the last two weeks. But higher than most recent days since. * IWM: Small caps in all time high territory although RUT bulls left a lot of money on the table at 1280 in the options markets (calls).

Tickers: - CELG: could have some more upside in the breakout. So credit put spreads could finance debit call spreads to take advantage of short term profits. - SBUX: Announced a split and ran 3% in two days. But with three candles since the split announcement it's showing possible weakness especially that markets have lept into highs. Bears may want to start building debit put spreads. Note that technically it could have a little more to go before a drop. - RUT: I am adding to my short positions using longer distance options strategies that will yield 15% return on risk with not much effort. I also can accomplish this using the IWM instead of the RUT. Get a full recap of this week's outlook in the video below: