Wednesday, July 18, 2007

Dow Dips 55, S&P Bounces Back Above 1540

All may be forgiven by tomorrow unless another shoe drops. The declines in the brokerage sector ended up being nominal to nothing in comparison to where they were last evening.

Expiration week generally tilts positive, or has for the last 13 of 18 expiration weeks, according to Schaeffers.

Today's CNBC Options Report: Options Report: Brokerage Stocks, Macy's, Expiration Bias

CNBC is also having me do what I used to do here, a summary of analysts comments: Morning Upgrades and Downgrades: Punk Cuts the Brokers. My goal is to have this report up no later than 8:30 ET.

Tonight IBM posted solid enough results and Washington Mutual through some fun and games with derivatives trading and an accounting change related to its mortgage servicing rights (MSR) also managed to get the sheeple to buy. S&P futures up a smidge.

At this point we are in the mid range of the OEX WRT expiration - far enough away from the low end for computer driven selling and far enough from the high end for computer driven buying as we get closer to the end of the week.

As long as we hold S&P 1540 area of the S&P on a closing basis, just as we held 1490 for quite sometime, I will stick to the bullish side. No matter what is thrown at this market, it refuses to stumble for much more than a few days.

What if high put open interest in indexes like the SPX and the Cubes simply meant that traders weren't just making directional bearish bets, but could afford to be more complacent on down days since they might have really bought the puts to be well enough hedged to avoid panicking?

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