Tuesday, November 10, 2009

10/11: Equities tread water

For the stereotypical, adrenaline-fueled prop-shop day-trader, today's equity market action was surely a letdown. Markets neither continued their thunderous advance of Monday nor suffered from volatile profit-taking. Instead, the S&P500 declined infinitesimally to settle about where it stopped 24 hours earlier: 1093. Today's intra-day high and low were, respectively, 1096 and 1087. Yes, the trading range was indeed shy of one percent.

My strategy of holding Vix calls -- particularly as these are November, only slightly ITM calls, which have a relatively fast decay of time value at this stage of their life -- has therefore proven itself as ill-timed, although it may yet settle as profitable. A pull-back in the markets continues to look feasible; although, on the other hand, the post-March market rally has put together more vertiginous rallies than that of the past seven sessions. Adding to the probability calculus is tomorrow's status as a quasi- market holiday -- bond markets will be closed in honor of Veterans' Day, while the equity markets are to remain open for business; certain European bourses may have curtailed operations, too. Will the reduced volumes potentially amplify any upside or downside moves? Or will the tepid flow of money produce even more indecision than that in today's ennui-filled performance?

6-month and 10-day charts of the S&P500, courtesy of bigcharts.com, round-out this evening's update:


Get some sleep, traders of the world!

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