Options Outlook: Green With A Red Tinge Amid Fed Talks, China Threat And Eurozone Issues

Scoreboard

Most indices finished the week with green weekly candles; however, they barely did so, and it could have gone either way. In fact, the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: QQQ) was red. On the face of it, doji candles (indecision) are present, but the price action details were far from boring. Just consider the action in Apple Inc. (NASDAQ: AAPL) down under 110 at one point during the week.

The bulls remain uncommitted, having no real conviction in the bull thesis other than to say, "It's been working for years and why should it stop now?" That being said, things have changed: 1) No U.S. QE; 2) The Federal Reserve is shrinking its balance sheet (anti QE); 3) Rates will be rising; 4) Other global concerns, like falling oil, China threat, Eurozone growth, etc.

Note: Intraday last Friday, markets and TLT (bonds) moved in the same direction. This is new (for the week) and could be that markets are pricing in some hope that rates are not rising in September.

Friday closed strong on the news that the Eurogroup agreed to implement the Greek bailout; however, the storybook has not closed, as Germany is expected to publicize a response Tuesday.

Focus Points

Caution for both bulls and bears: Extended periods of range-bound could end with a big move.

Don't chase; don't panic. Be cautious.

Other Variables

Facts did not change this week, only sentiment, so no change in thesis.

• Oil: new low. This cannot be conducive of a growing globe.
• Currencies: In flux and they can affect markets.

Tickers

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