Options Expiration Week...

Welcome back from the Loooooong Weekend! :)

Contrary to popular belief, real professional traders, especially derivatives traders like options traders, LOVE holidays and weekends just like cars love stopping by gas stations. Holidays and weekends are when traders top up their emotional gas so that they have more fuel to burn when the action starts again. If you keep running dry on emotional capacity, then you will make emotional decisions and lose money. So, never make trading a hobby. All traders need a real hobby and make that hobby and your family the purpose of making money through trading.

This is going to be another volatile week with options expiration coming up on Friday as well as important releases such as the Empire State Index tomorrow (Tuesday), FOMC minutes on Wednesday and the jobless claim number along with Leading indicators on Thursday (see economic calendar).

The Bulls are going to want to see more signs of stabilization and the bears are just going to try selling into every good or bad news. Yes, the stalemate between the bulls and bears is one that is hard to break right now with plenty of reasons to be bullish and bearish. On the technical front, the Dow continues to struggle at the bottom of its short term neutral channel with a little bit of short term bullish momentum in play (as indicated by our proprietary short term momentum indicator). Indeed, without this bullish momentum providing support, the Dow would have headed straight for the November low when it first touched the bottom of this short term neutral channel last month. For now, the Dow continues to be in a short and intermediate neutral trend and there certainly is a lot more upside potential than downside as downside is currently limited to the November low.