JD,
You ask, probably rhetorically, whether the late Friday selloff is , ...to be continued Monday.
A couple of items are worth noting. First, the general market is overbought by almost any short-to-intermediate term measure. According to probability theory, there is currently about a 25% probability of further upside above the general market's 20 day moving average and about a 75% probability of no further upside.
Second, and to my mind most interesting, is a glance at Friday's OEX (The S&P 100) and VIX (the VIX measures the implied volatility in a basket of OEX options) The OEX closed at 753.57, up on .37 (.05%) but the VIX closed at 22.95, up 2.48 (12.12%). So on almost no move from the OEX itself, the OEX options added massive volatility, enough to add 1-1/2 points to OEX options near the money. Most of this took place in the last hour Friday. (BTW, the put-to-call ration is at .43, incredibly optimistic and also incredibly bearish).
My guess (and my option bet) is that the index option players just changed their mind and that, beginning tomorrow, we're about to scare the turkey stuffing out of a lot of pilgrims.
Best,
--Steve |
