Saw Tooth Lunacy on the S&P 500

October 17, 2011

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In just less than 3 months, the SP500 has had 8 moves of 7% or more and 5 of 10% or more.

1. 18% (1346 to 1101)

2. 10% (1101 to 1208)

3. 7% (1208 to 1121)

4. 10% (1121 to 1230)

5. 8% (1230 to 1136)

6. 7% (1136 to 1220)

7. 13% (1220 to 1074)

8. 14% (1074 to 1224)

This is not normal.

I view it as the price representation of massive global uncertainty and hyper oscillation between market dominance of risk on and risk off.

Its great for experienced day and swing traders who have a handle on the weekly chop.

Otherwise, taking less risk continues to be wise.

Finally, if you are in the market, selling covered calls into extensions as I mentioned Friday seems prudent.

$SPX $SPY

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