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We got something today that we haven't seen for a while... follow through. The major indices started the week off on a very positive note after a very volatile week last week. All three averages rallied sharply from the get go and never looked back. At the close, the Dow ($INDU | Quote | Chart | News | PowerRating) had its third biggest gain in history as it shot up 447.49 points or 5.41%. The index did stall at resistance near the coincidence of its 20-day moving average, 38.2% retracement, and a 50% retracement, but blasted through it by the close.
The S&P 500 ($SPX.X | Quote | Chart | News | PowerRating) gained over 46 points or 5.40% and the Nasdaq ($COMPX | Quote | Chart | News | PowerRating) gained 73 points or 5.79%. Nearly every sector was in the green. Telecoms ($XTC.X | Quote | Chart | News | PowerRating), networking ($NWX.X | Quote | Chart | News | PowerRating), and airliners ($XAL.X | Quote | Chart | News | PowerRating) were stellar perfomers. Even semiconductors bounced back almost 7% after a weak performance last week.
Volatility once again got shot down after running near its September highs last week. The VIX ($VIX.X | Quote | Chart | News | PowerRating) gapped down, opened near its highs, and closed near the lows of the day. This shift in intraday sentiment again shows a big decrease in fear. We got a CVR 3 sell signal today. We're also close to a CVR 2 sell as perhaps some complacency is setting in after the recent spike in fear. This rally does look like it has more room to the upside. The VXN ($VXN.X | Quote | Chart | News | PowerRating) also sold off hard after hitting its October highs. The VXN gapped down, opened near its highs, and closed near the lows of the day. The VXN triggered a CVR 3 sell signal.
Points of Significance:
Taro Pharmaceuticals (TARO | Quote | Chart | News | PowerRating) gained 9% on double its average volume and hit a two month high. The shares also took out an intermediate-term downtrend line and looks like a failed descending triangle pattern. The September 30 calls appear somewhat cheap when compared to its historical volatility.
Action Performance (ATN | Quote | Chart | News | PowerRating) jumped 20% on more than double its average volume. The stock gapped about an intermediate term downtrend line, but there is significant resistance ahead near its 50-day moving average.
| Volatility Index | Close | Net Change | Signals/Direction | % Above/Below 10 Day Moving Average | Significance |
| VIX | 33.73 | DOWN 6.71 | CVR 3 SELL | 21.21% Below | Not At Extreme |
| VXN | 57.57 | DOWN 11.45 | CVR 3 SELL | 10.78% Below | Not At Extreme |
Abnormal Options Volume With Price Movement -- Abnormal options volume (calls and puts) with stock price movement
| Name | Symbol | Net % Change | Volume | Avg. Volume |
| Action Performance | ATN | + 20.65 | 426 | 201 |
| Saint Paul | SPC | + 11.81 | 939 | 245 |
| Enzon | ENZN | + 9.52 | 10024 | 1573 |
| Taro Pharmaceuticals | TARO | + 9.17 | 467 | 204 |
| United Rentals | URI | + 8.82 | 904 | 113 |
| John Hancock Financial | JHF | + 8.62 | 1274 | 171 |
Stocks With Biggest Spikes in Implied Volatility -- Stocks with biggest increases or decreases in implied volatility compared to previous day
Spike Up
| Name | Symbol | IV | Previous IV | High IV | Low IV |
| PRG Schultz | PRGX | 99.9 | 76.3 | 73.6 | 42.4 |
| Ceridian | CEN | 65.9 | 51 | 47.9 | 25.9 |
| Choicepoint | CPS | 49.1 | 39.4 | 48.8 | 22.4 |
Spike Down
| Name | Symbol | IV | Previous IV | High IV | Low IV |
| XL Capital | XL | 47.4 | 64.7 | 67.6 | 25.6 |
| Constellation Brands | STZ | 33.4 | 44.6 | 44.8 | 25.6 |
| J.P. Morgan | JPM | 66.1 | 85.8 | 79.5 | 29.4 |
| American Express | AXP | 41.7 | 53.9 | 54.5 | 30.2 |
| Citigroup | C | 49.9 | 64.1 | 65 | 23.3 |
| Univision | UVN | 71.3 | 90.4 | 86.8 | 37.1 |
Please use stops on every trade!
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