Monday Market Recap

Today's rally came just as everyone had predicted... right?  Amid the heavy selling and broken support for most of this past Fridays trading session it was tough to maintain a bullish stance on the market.  The terrible market breath (sic).  The rolling over of the averages.... but alas.  The markets again defied the odds.  It rallied overnight, it rallied at the open... and then it rallied some more.  The streak was snapped.  The world was saved.  We will live another day  to inhale all that garlic breath.

$IWM has offered a great insight in 2015 - in terms of timing a reversal in the market.  That $120 level has acted as a spring board for higher prices.  Ultimately on Friday that $119.88 close left it  under key support.  However today's massive rally got it back over the $121 level and set the stage for a continuation of today's bullish action.

Here is today's Option Action Recap

Market Scans

Another clue on Friday was the VIX.  The VIX, amid some heavy selling and wild trading action,  closed the day lower.  It was a giant shrug of the shoulders.  'Me VIX, me no care about market.  Me tired.'

$IWM - This $120 level is vital.  We've seen it get broken, but never more than one trading session.  If stocks are to hit new record highs from here, I think prices need to quickly move higher off this most recent $120 test.  I think another $120 test for $IWM could break this strong support level and see stocks encounter that long awaited correction.  Correction.  Yes.  Now that I got that out of the way let me continue my ambiguity.

$QQQ was able to close above that $110 level on Friday.  Today it exploded to the upside closing near the highs of the day.  $AAPL was up almost 4%, that helped as did many of the other tech names recovering recent losses.  After the bell GOOGLE has turned into an Alphabet company.  In response investors have sent the stock up more than three consonants and a vowel after the closing bell   That is also boosting the NASDAQ after the bell.  In short its setting up for more gains tomorrow.

The $SPY tried to muster a $208 close on Friday.  It came within pennies of that.  Close enough to  keep the bulls cautious and the bears salivating.  Today's gap higher worked in two ways.  It exacted pain on the bears holding over the weekend and it made the bulls chase the action.  But that didn't mean you couldn't go long at the open.  I was able to muster a few $DD calls for a bounce.  I also played bonds for a pull back.  Friday's action for the bond market was over done.  Let's see if the $SPY can hold over this key $208 level in the days and weeks ahead.

$DD looks poised for a bounce.  The stock hit support and is coming out of oversold conditions.  I was able to get a few calls in anticipation of this possible move higher.  I also got some $TLT puts for a move lower.

$AAPL is back in the saddle again.  Amazing the difference a week can make.  Last weeks sellers are buying back today at higher prices?  Or has the share buyback machine gone into over drive.  I'm torn here.  I do think $AAPL is going to hit new highs.  But I am also seeing those dreaded analysts return.  I prefer all the negativity of weeks past, not continued bullishness.  With that being said, I do think there is a risk for the stock coming back to last weeks lows.  It sounds crazy tonight with stock futures higher and $AAPL putting in a near 4% up day.  But I can all most feel it.  Maybe I'm wrong.  But if $AAPL opens another 2% higher tomorrow, I'll be grabbing a few PUTs for a pull back.

Back to that VIX.   12 12 12 12 12 12 -  12 is the magic number.  A firm break and hold below that number this week and I think you can kiss any correction before the fall goodbye.  But we must also focus on the 12 level as its been a point of interest for spikes to the upside and corresponding stock market pull backs.  12 12 12 12 12 12.  Watch it in earnest.

I see everyone talking about the bottom being put in for energy.  Sure the chart looks terribly oversold.  But until we get the trend to change, this is nothing but a bounce.  Bounce bounce bounce.  People were talking about the bottom for $FCX 30 dollars ago.  It was at $10 on Friday.  Unreal, but a sobering look at what happens when you think a bottom is in.... it just keeps falling.  The great thing about stocks that fall, they have a habit of bouncing.  Energy, oil, miners.... they are bouncing.... But the bottoms are not in.  Hello.  That's like saying Jason Pierre Paul doesn't need all 10 digits to be a great player.  Until I see that guy on the field swatting extra points and throwing overrated no superbowl winning Dallas Quarterbacks on the turf, I think his career is seriously compromised.  Get that $XLF, $GDX, $FCX, $USO chart on the field.  Watch it play, and give it time.  And when they finally do hit bottom you can put a 'finger' on it.  Even if you have only 8.5 digits.

$XLE  after today's action still looks incredibly oversold.  But Newtons law says something oversold can remain oversold until it's not oversold anymore.... go it?

and finally as my ten digits grow weary from a long day of typing - far removed from any recreational explosive devices that would put my very young and promising career behind a keyboard in permanent jeopardy - let's do one more chart.  One I have been highlighting and jabbering about for many moons.

S&P500 futures.  Look at that inverted head and shoulders.  If and when it finally comes to fruition, watch all those technicians marvel at their discovery of it.  Looking closer I am becoming more amazed at its formation.  The left and right shoulders have similar patterns.  So pretty.  You've got a purty chart on you.  And with that I bid you a good night.  See you in the chat room early tomorrow morning.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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