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Anxious Market Requires Caution


While prices may be manipulated, the underlying sense of anxiety cannot be.

Good morning, Minyans, though not so good for Hoofy who once again finds yesterday's lows above him.

So where from here? In the Nasdaq 100 (NDX) the 2040-2050 range is obviously huge and I suspect that exogenous market forces (Plunge Protection Team) can read the charts as well as anyone else. I am not setting forth conspiracy theories here, as any bear who has listened to Mr. Paulson and Bernanke speak of late would be "imprudent" not to factor the government into the trading equation.

Below 2040 the next stop resides at the 2000 round number. For the S&P 500 (SPX) things are a bit less clear with the 200 dma already above head at 1483, and no obvious support areas until the 1425 area.
However, while prices may be manipulated, the underlying sense of anxiety cannot and that will likely keep the volatility index – and by extension option prices – nicely goosed up even if we were to have occasional magical rallies. And that's how I am playing it, being very stingy in selling my long standing stash of index puts, opportunistically selling calls, and covering outright equity shorts in scale no matter how low I might think they can go.
And don't forget the "buy button". Yesterday I offered a few names, but not to the exclusion of many others old-time faves, such as Akamai (AKAM), Hologic (HOLX), and especially McDermott (MDR), which I am hoping it does a quick trip to $50 just for me.
One last thought, before the madness kicks off: Reacting to prices going against you (except for stop losses) is often a recipe for more losses. If you were not set up for what's happening right now, there are three things that can be done: buy, sell, but perhaps more importantly, nothing.
Good luck and have a good Friday!
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Positions in MDR, AKAM and HOLX.
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