So far today, it’s a rout.
Investors aren’t just selling stocks with big exposure to troubles in Europe or financials at risk from Senate’s financial reform legislation, they’re selling everything.
Commodities stocks such as Statoil (STO)—down 6.24% as of 1:20 ET today.
Gold ETFs such as Market Vectors Gold Miners ETF GDX)—down 4.7%.
U.S. growth stocks such as Cummins (CMI)—down 8.94%.
U.S. technology favorites such as Apple (AAPL)—down 4.35%.
Chinese technology favorites such as Baidu (BIDU)—down 4.11%.
Some investors are throwing in the towel.
But some of today’s selling of everything is a result of the options calendar.
Tomorrow, May 21, is a big options expiration day. That means a lot of the action today is by big traders setting themselves up for the expiration of their options tomorrow. I’m not an options expert by any means but when stocks are falling, big investors who want to stay neutral on their options portfolios can wind up having to sell stocks. Some of today’s selling isn’t because the world as we know it is coming to an end but because of the internal workings of the financial markets in the very short term. And the expiration of options is certainly related to today’s spike in the VIX volatility index to a new 52-week high
The day before expiration and the day of expiration always add extra volatility to the markets. And that makes today’s action especially hard to read.
i have no idea what i’m doing but i bought A123 on a good dip yesterday. I think it was on Jim’s watch list. I’m stupidly optimistic
Monday is a holiday for European markets.
STL,
Don’t lose too much sleep on the options expiration date thing. Suffice it to say that options expiration dates tend to make the market act unusual.
Good grief…I learn about level of support and resistance today only to find myself “totally” lost on this article about options and expiration dates! Could someone kindly give me a link to read or an answer here to help me understand??
Thanks a bunch!
Really looking forward to an update on tc and maxwell
Let us not forget the “go away Friday, come back Monday” crowd of traders. Expect some heavy selling late tomorrow afternoon.
S&P holding above 1050 today. To me, much of the “madness” this week is options. I look for an up to flat day tomorrow with an “all clear” next week.
Jim,
I know people have been asking your thoughts on TC this week as it has fallen. I know stocks can always fall more but at this point it is almost 40% off its high. Would you start to accumulating shares if it falls much further?
So things are down for a day maybe. The Euro is up a bit at the moment.
Have just bought CMI. Have quite a bit of RIG. It is also way way down. Would you had to it? Cisco and Microsoft are not quite so far down.
Jim,
After the “dust” settles from this wonderful day and week, could you sort through your Dividend Income Port. as well as your Jubak Picks. Possibly thoughts have changed or become more clear with this weeks developments. Being a follower of both port., this would be very helpful in these uncertain times. Thx.
you’d think they would at least have the common courtesy to give a ‘reach around’……….ouch
Madness!