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Monday brought in the markets favorite 'ace in the hole', as the 'war card' was played once again for a nice upside pop in the ETFs. For market players, this trick seems to be losing its effectiveness though, as major resistance held the averages in check, triggering aggressive selling in the final 90 minutes of trade. Needless to say, it's still difficult to teach an old dog new tricks, as Tuesday had similar headlines propping up the market in the early going. The difference today was that it was quickly evident that investors were not willing to sit long, being long or short, for that matter. The ETFs finished the day in a very tight trading range, with anemic volume to match, as all three market proxies finished the session down slightly.
No signals are triggering with the CVRs this evening, but with range lows being broken ( VIX ), and upside resistance in place ( ETFs ), the bet is on once more...the delta neutral synthetic straddle. Let's see how it all plays out in the Dow Jones ETF (DIA | Quote | Chart | News | PowerRating). Yesterday, with the index at 85.05, the 85 level calls could be had for 1.65. With closing prices so far this is a scratch trade. Part of the hedge could be taken off at these levels to shore up the position, but in light of the intraday technical action, the stretching of the VIX down to the 2 Bollinger Band on the daily, as well as the markets reaction to the latest "is he or isn't he" news, we'll continue to lean it short with our original ratio of 2 contracts for every 100 shares.
Points of Significance:
| Volatility Index | Close | Net Change | Signals/Direction | % Above/Below 10 Day Moving Average | Significance |
| VIX | 29.59 | Down 2.14 | NONE | 7.4% Below | Not At Extreme |
| VXN | 40.92 | Down .52 | NONE | 3.7% Below | Not At Extreme |
Abnormal Options Volume -- This list includes both percentage movers that are normally associated with an increase in options activity, as well as stocks that have unusually high activity and / or technical situations, reflecting increased speculation of a potential price move.
| Name | Symbol | Net % Change | Volume | Avg. Volume |
| Analog Devices | ADI | -8% | 3390 | 600 |
| SanDisk | SNDK | -1% | 10182 | 2664 |
| Nasdaq Biotech Index | IBB | +1% | 5072 | 751 |
Stocks With Spikes in Implied Volatility -- Stocks with Increases and Decreases in implied volatility compared to previous day. Candidates are then screened qualitatively. These lists represent those issues that carry a blend of liquidity and/or technical setups that might deserve further notice.
Spike Up
| Name | Symbol | IV | Previous IV | High IV | Low IV |
| Qualcomm | QCOM | 55.8 | 51.4 | 82 | 46.5 |
| j2 Global | JCOM | 84.5 | 69 | 88 | 65.5 |
Spike Down
| Name | Symbol | IV | Previous IV | High IV | Low IV |
| Altria | MO | 71.5 | 84.2 | 69.6 | 20.1 |
Please use stops on every trade!
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