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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: MythMan who wrote (236162)4/17/2003 10:36:48 PM
From: Gersh Avery  Read Replies (1) of 436258
 
Sorry I didn't respond earlier ..

Just got back in again.

Options dictated much of the action that took place over the last several days.

Option sellers sometimes feel a need to be covered. When that takes place, you have an exaggeration of an existing condition. In this case, the market was higher than the max pain(R) point. The result was buying of stock to hedge for call shorts. Much of what took place on Monday and today, I believe, was caused by that.

Generally, during op-ex week, there is an attempt to bring the market back to the center point. It's when that attempt fails that you have the second burst of activity. Usually, Tuesday is a turn point toward that center point.

And .... over on the BK thread, I mentioned to Luc the possibility of the Monday start down. (I think posted on Monday)

Back to why ..

You like the VIX?? Says something, don't it ..

There are several proprietary systems that are saying top here. Many of those may take several days to kick in.

Why Monday? The option pressure is gone (for the moment). Stock that was purchased for hedge is no longer needed. Therefor the pressure that drove the market up will then be a drag on the market.

Not saying that it can't go up .. just that the odds are getting higher and higher that it'll head down .. a lot.
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