Monday, October 15, 2007

Retreat or regroup?

The Qs broke down today, mirroring loses of the other major indices. The good news was that weakness didn't carry the Qs down to S2, although there were several occasions when it sure looked like it was going. In addition, the last /12 hour looked fairly strong with the NYAD and TICK upslope and the VIX on a steep decline. The Qs regained .37 in that last 30 minute bar on almost 16M shares. Whether this will carry through tomorrow remains to be seen.
The VIX is now 8% above the 10DSMA and looks poise to continue its uptrend, although it is bouncing off the upper band. Expiration week can produce some unexpected volatility and the developing earnings reports are create a frothy mixture in some sectors, such as the financials.
Although the portfolio is net long at this point it is also fully hedged with ratioed covered calls and will remain so until after expiration.

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