Weak Weekly Wrap-Up

Well, you can certainly see why we’ve been holding 50/50 all week.

We talked about there being a lot of "pinning" during member chat on Friday and Dr. Brett pointed out a very good Wikipedia entry on the subject, something all option traders should be aware of come expiration day but pinning cannot explain a very disappointing week in which we topped out just 3.5% over our 8,650 center line and failed to hold even that at the week’s end. 

I had said in last weekend’s wrap-up that we needed strong leadership and firm action on the Auto bailout on top of the much-anticipated rate cut to get to our 9,100 target and clearly, after disappointing and then downright spooking the markets by holding off until Friday morning, it was once again a case of far too little, far too later to make a difference in the markets as we couldn’t even break 8,800 on Friday’s auto boost.  Notice that the Fed cut took us to 8,950 and the auto bailout gave us 200 more points three days later so it could have been possible that, had the two been timed together, we could have broken 9,100 and had a much better-looking technical picture on Wednesday.  Bush already had shoes thrown at his this week and the NYTimes has an excellent article this weekend laying out the case for how this administration totally destroyed the US economy through poor policy and inept handling of the results of the poor policies so I won’t embellish here - let’s just say things did not go so well this week and not point fingers (or throw shoes).

We are still dealing with the aftermath of the Madoff scandal and, like the bank failures, until we have a clear idea of what the damages are and who is going to be affected, it’s very hard to move forward.  Also, the timing of the incident made it too late for most people to pull money out of hedge funds so a lot of latent damage is to be expected in Q1 and traders are dreading the possible effect of another round of liquidation-mania that took us lower than low Q4.  Just when we thought it was over - they pull their money back out!

It is stil, very much a day trader’s market and we’re having a relatively easy time picking short-term momentum plays and an even easier time selling…