Bulls & Bears Even But Opex Tilts Down
Bulls and bears come into the new week on equal footing, both still fighting it out in the trading range. The bulls have done nothing wrong to indicate anything more than a 3-5% pullback and the bears will have a lot to prove at that point. Since early December, the small cap Russell 2000 has lagged and the bulls are getting to that point where it’s time to step up. Clearly, the unpopular NASDAQ 100 has been the leadership index. As I mentioned on CNBC last week, I do think Dow 20,000 gets hit sooner than, but that would be a short-term selling opportunity rather than a launching pad.
For this holiday shortened, option expiration week, the seasonal trend is for mildly lower prices and that’s how it look like the week is beginning. The “losers” from Q4 or the mean reversion instruments continue to lead the markets. Those are treasury bonds, gold, yen and euro. I am a little surprised that staples, utilities and REITs haven’t stepped up, but maybe they need a little soft patch from stocks. In any case, these are short-term opportunities and not trades for the whole year.
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