Monday, May 31, 2010

Stock market outlook: Volatility will abate somewhat this week.

I wanted to summarize the data for Friday and where we were last in preparation for tomorrow. I checked on Friday's Put to Call ratio at the open on Friday and it was at an amazing 2.10 within a half hour of the open. It closed on Friday at 1.21 and while that is much better the day sets up a rally for Tuesday or Wednesday. Those are extraordinary levels and the 2.10 extreme and a buying signal.

The VIX closed at 32.07, up 2.39 or 7.5% with the high on Friday at 33.30. I am waiting for a rally on all Indexes with the Dow going to 10,500 to 10,600, before it reverses and the market goes down again significantly. I expect volume to drop somewhat as the market rises and then to pick up on selloffs.

I still like TZA Options to trade and plan to over the coming days and weeks.

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