Supply Meets Demand

Last Friday was options expiration so you might have thought there would be some fireworks. Friday was even quadruple witching, meaning the stock futures also expired which normally causes some movement. Looking at the Dow, we didn’t see much in the way of a big change in price but we did see a falloff during the afternoon.

There was a marked difference in the way the NASDAQ traded. The Comp had a pop in the early going but that didn’t last for more than about two seconds. This move was on the back of GOOG’s earnings released on Thursday evening. While GOOG managed to put in a fairly strong day, its highs were shortly after the bell when it traded right around 450. After the early pop, GOOG sold off the rest of the day to close near 437 up about 22 points. Meanwhile the Comp ended down nearly a full percent so even GOOG couldn’t hold it up.

We see an interesting week ahead as the market tries to stretch the bullish euphoria after that 200 point day last week. The market traded fairly large chunks of volume during last week’s sessions especially after the 200 point move. We think supply is there to meet the demand. The other thing that we will be watching will be how volatile trading will be. The starts and stops of the past few weeks indicate that there is a turn coming, one of significance. On top of that, the strength in prices has not carried over into our non-price technical indicators. Momentum has indeed slowed even considering the 200 point move.

We see that the precious metals came back with a vengeance on Friday too. Here, too, we think it’s important to follow the volatility for signs of a turn. We continue to watch.

You should…Be careful out there…

Dow Industrials: 11,347.45 +4.56
RYVNX: 18.23
RYAIX: 21.82
TLT: 84.80
BEGBX: 13.06