The dollar is up; bonds, gold, silver,and light sweet crude are down; meanwhile,  the Aussie dollar, and the broad market US futures, the Yen, and the Euro are down slightly to even. The Nasdaq broke its trading range yesterday, and many commentators anticipate it becoming a leader.

There has been an Effective Volume/Price divergence:


Courtesy Pascal Willain and Effective Volume

Considering a rotation of my hedges: Over the past few weeks, I have bought at the money calls in IWM on pullbacks and sold calls one strike up at the intra-day highs. Of course, this is easier said than done. But since it fits my overall options management plan, I don’t mind if from time to time (like yesterday) I sell high and buy still higher. In any event, these things add up during a strong move, and the short calls keep the swings from wildly influencing the P & L. I have attempted to buy a QQQ breakout and cover it in the same manner.  Currently, that position is flat– indicating the strongly contained price range in which the Nasdaq has traded recently. The price and volume action in Google suggests a rotation may occur. Apple (AAPL), however, is down $7.15 pre-market as I type. No matter how strong the rotation, a lag or continued correction in AAPL does not bode well for the Q’s.

Significant news today include: Housing Starts, 5:30AM PST; Producer Price Index, 5:30AM PST;  and FOMC Minutes, 11AM PST. All are [Star].

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