11/21/10 Weekend Update & Outlook - Unchanged For The Week, But Quite A Ride

Even with volatility earlier in the week Markets finish exactly flat.  Friday's options expiration was a lesson in pinning (when a market or security is magnetized to a specific significant strike, for example S&P 1200). Markets hovered around opening prices all day Friday.  Let's see how the markets ended for the week:

 

Dow          -0.00%

S&P          -0.07%

Nasdaq    -0.20%

Russell    +0.72%

VIX             -11.26%

 

  

GM released its highly anticipated IPO this week.  The GM IPO is the largest in US history at $20.1 billion after issuing shares at the top of the proposed share price range.  As a result, the US Government's stake in the automaker is now 33%, down from 61%.

 

China raised bank reserve requirements on Friday for the second time in 2 weeks in an attemt to curb inflation.  Hong Kong also increased taxes on properties sold that were owned for less than 2 years.  China has rocketed out of its recession a year ago by implementing prudent economic measures in a timely fashion; something maybe the US could learn from.

 

Dell (DELL) and Marvel (MRVL) released good earning this week and Cisco (CSCO) found some footing in the $19 area after falling out of bed after earnings.

 

Friday's options expiration allowed subscribers to let 3 credit spreads expire worthless for 17.30%, 8.13%, and 8.05% profits respectively.  As well, a new iron condor was opened Friday with a very short life expectancy to take advantage of the upcoming Holiday week.

 

The market is looking fairly good going into the end of the year.  The Chinese inflation curbs and Irish debt stories were taken in stride this week and the market is looking fairly healthy as it has found footing at S&P1200.  A nice orderly pullback has taken shape, as I have been looking for, from a high of S&P 1230.  Tuesday & Wednesday's island reversal is evident on the SPY chart so we will have to see when the gap is filled back down to 1190 / 1180.  The SPY closed right on the 20day moving average Friday but with it being opex and the last day before the holiday week, one can't draw too much from the performance. 

 

This week is expected to be very light volume due to the Holiday but that can also make for some violent trading.  All in all, I don't expect much to happen though.  Looking forward to the end of the year, it is typically a positive time for the market.  There may be a run into the end of the year but it is too early to tell.  I personally would love to see a further pullback to the 1160 / 1180 area before such a run.  Time will tell but cruise control is a good place to be for the next week or so.