OPTIONSMART MORNING UPDATE: Slipped on economic concerns

May 22nd, 2009 at 7:52 am

OPTIONSMART MORNING UPDATE: Slipped on economic concerns

1. OUTLOOK: Though declines were deep and broad, stocks finished well above the session lows. Autodesk beats by $0.10 and jumped 10% after hours. QQQQ implied volatility still below the 30 level. The market sentiment remains bullish. Investors look for a catalyst to resume the upward trend.

U.S.Futures point to a higher open.

QQQQ chart

2. KEY DRIVERS FOR TODAY: 

  • The index of leading economic indicators rose 1% in April - the first increase in seven months -- following a revised dip of 0.2% in March
  • The U.S. government invested an additional $7.5 billion in GMAC, the main source of financing for General Motors
  • Sears swung to surprise profit
  • ADSK beat by $0.10, announced cost-cutting plan
 
  • China's economy appears to be losing traction
  • GM to file for bankruptcy as early as next week
  • Initial claims for the week ending May 16 totaled 631,000, while continuing claims climbed to a new record of 6.66 million
  • The pace of store bankruptcies will pick up - even if consumer spending rebounds - in the next 12 months
QQQQ's implied volatility rose to to 29.2
According to our estimates, the NASDAQ index has a70% probability to move higher today
2. WISDOM NUGGETS:  Prices have memory.

3. TRADING OPPORTUNITY:  Buy bullish QQQQ or SPY spreads.

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QQQQ Jun 31/33 Debit Call Spread:
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