As my disclaimer states, I’m not a professional, I don’t render advice and anything I post here is for educational and personal purposes only!

With that said… This last week has been quite a roller coaster for the markets. A solid 2-day rally, followed by a mixed bag today. The yields on bonds are starting to rise and the commodities market has been crazy! Oil hit an all time high, Gold is back over 600 and the NASDAQ is at something like a 6 year high!

I read quite a bit of commentary, and am going to stand on my soap box and agree with Michael Cavanaugh from myfuturesonline.com, Somethings got to give!?!?!. My read is that the market is horribly overbought and we will see some quick profit taking in the next few days. Now, I could be completely off my rocker, the market could continue to run like wild fire, but I just don’t see it.

There is too many factors out there right now that cause me to believe we will see a short term correction. I think a lot of this current exuberance is simply a result of the fed’s statements this week that rate tightening nearing an end. That news, coupled with some good earnings and expiration week has the market doing a happy dance! In my opinion, today marks the start of the correction. The Russell, one of my favorite index’s has been leading the charge for the past few days; however, today it was noticeably absent from the continuance of the rally, along with the NASDAQ.

I wouldn’t be surprised if tomorrow and Monday marked losses for the Dow, NASDAQ, S&P as well as the Russell. Again, I could be wrong, and only time will tell. I still believe that we are in a general upward trend, and that the bullish bias will continue going forward, in the short term, I think we are due for a correction.

Well, there you have it, I’ll get off of my soap box and watch. Tomorrow is expiration Friday, so I’ll have some more margin to play with! Watch for a few more trades, likely in the S&P or OEX. I’ve also started to investigate the IWM (Russell iShares 2000) for lower margin requirement trades, the $1.00 strikes make it easy to put on some great trades that have lower margin requirements.

Enjoy your weekend, and trade smart!

Categories: Options Trading