Looking at todays Heat Map we see a “Sea of Green”. Most of the buying today literally came in the final hour of the day. While investors can breathe a sigh of relief active market traders might need a chiropractor for whiplash. The SPY broke down this morning then recovered massively. Those that went short this morning, which is when the shorts came in, not yesterday, made small fortunes today.

Though there is still strength in Tech this could be the start of rotation from growth to value stocks. If this is the case it will be the fastest rotation we have seen in a long time. Not something that was expected, I’ll be the first to admit that, and stocks like CRM and INTU had good days along with INTC. But the bigger names that typically carry the market are treading water here.

Options traders have a metric called “Expected Move” It’s a mathematical calculation typically used for Earnings plays. What it tells us is where the stock is expected to move by calculating with mathematical probabilities. Not the direction, just the percentage amount. So lets say our stock XYZ is sitting at $100.00 and has an Expected Move of 7%, we would then anticipate it staying within the $93.00 – $107.00 range.

We can also use that formula to calculate the E.M. of indexes because they have Options. SPY broke down PAST it’s E.M. this morning and then made an Epic comeback offering hope. Like I said, active traders might need to see a chiropractor, Mama said there’d be days like this…

Invest wisely, live charitably and be well

Brother Bill

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