Market Wrap Monday Aug 15

Well at least we didn’t have another 4% range day. S&P & the DJIA closed up about 2%, NDX by about 1 1/2%.

Option volume tapered off to “average”, as 11.5 million contracts changed hands. VIX closed at 31.87, down 4.49 for the day, off almost 12.5%. VIX has been down four of the last 5 session (with SPX up 4/5). Volume in VIX options was less than 300,000 contracts, but the market rally coupled with tomorrow being the last day to trade VIX August options may have been major factors. VIX is AM settlement on Wednesday Aug. 17th. SPX traded ~ 1.1 million contracts and SPY almost 750k at The CBOE.

Option traders concentrated on financials, technology and M&A stocks today. MMI cracked the top 10 as did RIMM and AAPL, as analysts scrambled to evaluate the GOOG bid for MMI. Nokia option volume was brisk at over 3X the normal volume.

Things to watch the rest of the week include the major economic reports (mentioned by Price Headley) Tuesday through Thursday, and chart resistance. Traders tell me they are trying to figure out where resistance for SPX, 1204, is as the market heads higher. One mentioned 1220 to 1228, another said the 20 day moving average was 1250, while a third said the 75-day and 200-day moving average were near 1280. The VIX under 30 would be a bullish signal to some, the 20-day average is near 27. We have a guest chartist arriving later in the week, maybe we could talk him into some semi-regular contributions.