OPTIONSMART MORNING UPDATE: Sunday Edition
December 6th, 2009 at 3:31 am
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OPTIONSMART MORNING UPDATE: Sunday Edition |
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1. OUTLOOK: The market made its way up to fresh 2009highs amid broad-based buying, but support soon faded, which suggests that the good news had largely been priced into stocks. A stronger dollar also put some pressure on the market. On the Nasdaq, advancers topped decliners by almost two to one. QQQQ implied volatility inched lower. Intel, Microsoft and Netflix are among the companies due to attend Barclays Technology conference in San Francisco on Tueday. After the close, chipmaker Texas Instruments will issue its mid-quarter update. The market needs more catalysts to move higher from here.
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real-time updates and comments! |
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2. FEAR GAUGE: QQQQ implied volatility turned higher.
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. |
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4. WISDOM NUGGETS: The market doesn’t care if you’re a bear or a bull. It doesn’t care about your fundamental or technical analysis. The market will do what the market will do, with or without you. One of the worst things you can do is a trader is to start to feel like you’ve lost control of the market. You can have all the indicators in the world telling you to buy only to enter the trade and have it immediately go against you. Accept it, you are not in control. |
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