Well now that the big Fed decision is out of the way, we can all focus our attention on the budget crises ;-). We have come a long way from the August lows in a pretty short amount of time. September has been a great month for those that bought the dip. If you missed it, I think you will get another chance. Next week there are plenty of reasons to support the idea that we will pull back or at least hang out and consolidate. First, historically the week after September expiration tends to be bearish. You can read about that here. Second, the market has become pretty extended and could use some time to digest its recent gains and allow for the moving averages to play catch up. And third, the media will likely begin to spew a ridiculous amount of garbage regarding the budget crisis as Congress gets back to work* (I use that term loosely).
I would look to buy any weakness we may get next week at key support areas for several reasons. One, Bernanke is the man. Two, we are still in a longer term uptrend. Three, end of the quarter mark ups will likely take place because of all those under-performing this quarter. Four, read my post from a couple days ago regarding a possible early Christmas and amazing opportunity. Areas of SPX support I would look to are 1700, 1688 (the gap from last weekend after L. Summers stepped down), and finally 1670/1672. I would be surprised if we dipped below that.
Open Interest and notes
SPY – honestly I’m a bit surprised to see this many puts versus calls on SPY. We are already below the second highest puts of 171. The first is 170, which aligns well with the gap from last weekend.
AAPL – Chart not looking too hot right now beneath its 10 and 20 day MA’s, which are both pointing down. See if any sales news this weekend can pop it back up. Even if it does though it may not hold up long. Highest calls are at 480.
AMZN – Good breakout on volume on Friday. It did pullback quite a bit from the highs of the day, but given monthly expiration that could account for part of it. Holding Thursday’s breakout above 311 would be good. If not it will likely visit the 305 and 10 day MA area again. The highest calls are 325, 300 for the puts.