OPTIONSMART MORNING UPDATE: Retreated on weak data

1. OUTLOOK: The tech sector ended Tuesday's volatile session with modest losses as investors digested mixed readings on the economy.  There were plenty of trading catalysts this session but  market players were generally subdued. Brocade beat estimates and reaffirmed the guidance. Analog Devices upgraded. Trading expected to be thin ahead of Thanksgiving.  The technical chart looks bullish. U.S. futures point to higher open. 

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2. FEAR GAUGE: QQQQ implied volatility remains low at 19.7 (52-week lows) as recovery fears fade away.

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: Do not buy a stock because it is low priced (or sell because the price is high).  

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