Simpler Sentiment – Weekly Wrap-Up 10/14/16

After show some early gains, the S&P 500 has slipped back to near unchanged on the day. It is lower by about 20 points on the week after Tuesday’s losses, while Thursday did seem to be a pivotal day.


The Nasdaq 100 followed almost the exact same pattern after putting in a new all-time high of 4904 on Monday. The Russell 2000 showed the most weakness, with the action as we head into the close having it on pace for four straight days of losses and the lowest close since in a month.


The VIX is all the way up at 16 even after starting the week down near 13. The VXST, on the other hand, is down at 12.93. That suggests the “fear” is not in the very near term, but over the next 30 days, which makes sense given the landscape.


At the start of the week most of our traders were bullish. Now they have a mixed outlook as the market is quite reactive as we wait for the election.


Henry is focused on the monthly options expiration next week. “We saw a nice “Pit Bull Low” on Thursday, and letting that premium decay while we start getting into the next round of earnings makes sense to me.”


Chris says that he thinks the market is a slave to the bond market. “With bonds down again, I think the SPX will try to break under 2100.”


Tony is looking for “these indexes to explode higher next week”.


Tucker points out just how nervous and volatile the markets have been. “For now the markets seem to have put in a bottom at support on Thursday. I expect the markets will trade in the same range it has been in for the last 30 days until the election.


David is also looking at Thursday’s low as an area “where it made sense to try buying the market.” He said that “The S&P low on Thursday finally presented an opportunity to get long the S&P 500 but there is still more to be seen in order to confirm that the idea will work. The patterns over the coming sessions will determine whether it also makes sense to hold onto those positions. For now, they are too nascent to draw a conclusion.”


This market will like remain reactive in the near term, but within a given range. It is a good time to be nimble and keep your time-frame relatively short.

Coming Up Next:

Trade The Election 2016

Join John F. Carter and Raghee Horner to discover how traders with over 50 years combined experience are preparing to take advantage of the upcoming election chaos.


Chris McKhann

Chris McKhann

Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.

Leave a Comment