When I think about why the market moves I remember a “catchy” little phrase. Fundamental’s trump Technical’s, BUT Sentiment trumps ALL !!!
I would expect the market to give back some of yesterday’s gains. It probably should not slide down a couple hundred points because the fundamentals do not call for that big of a drop. But, don’t forget sentiment moves the market big, especially if we receive more negative news in Europe. Look for a bit of profit taking today but also look to see if levels of support hold today for individual stocks.
We will see some profit taking where people are not really willing to let positions sit overnight with the market volatility we are currently seeing. Look for another down day Friday even if we do see great economic reports. Too much may happen over the weekend for trend traders, momentum traders or day traders to keep anything in the market. We will see if big money sees the current levels as buying opportunities. In the education here at OptionsAnimal we teach the Covered Calls or Collar trade, maybe a Strangle, Straddle to take advantage of this type of market. Thursday has the job reports and Friday has a few reports that will move the market one way or another. Don’t forget to watch Europe for any comments on the bailout plan to see if there are any comments that will push the market down. At this time restructure the collar or reset positions to allow you to weather this storm.