OPTIONSMART MORNING UPDATE: Finished flat

1. OUTLOOK: The market spent almost the entire session trading with moderate losses until some late support helped the major indices improve their position and settle at afternoon highs near the neutral line. The tech sector was this session's best performing sector. It booked a 0.5% gain with help from semiconductor stocks, which advanced 1.5%. Kaufman raised their Apple estimate. QQQQ remained very low. We don't expect substantial movements today.

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2. FEAR GAUGE: QQQQ implied volatility remained low.  

About Implied Volatility.  Investor fear and greed play a significant role in financial markets. The question is, how can investors measure market sentiment in an emerging market situation? How can they gauge the fear? Volatility is a well-known measure of risk in financial markets. When volatility is low, there is a lack of fear. High volatility, however, suggests a fearful markets. Volatility can be calculated in two ways. Either from historical stock price data or from current option price data. Using the second method results in an implied volatility measure. It is a reflection of fear and greed amongst a wide group of market professionals. It’s not wise to ignore this parameter.

4. WISDOM NUGGETS: Wishful thinking must be banished.

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