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Market Mastery: Keys To The Up Day



May 18, 2011 – Comments (0) | RELATED TICKERS: DELL.DL , USO , SPY

The markets turned higher from the start, inching as the Dollar faded. The classic inverse Dollar trade still holds 100% true. The Dollar opened flat to higher and faded to the negative side. Because of that, the markets opened flat to lower and advanced. The SPDR S&P 500 ETF (NYSE:SPY) is holding the gains at $133.73, +0.56 (+0.42%).

This week is options expiration. All traders must be aware of this factor as it is part of the reason why the markets are trending higher today and most likely will tomorrow as well. Why? Options expiration week is almost always noted by sharp moves in one direction and then the other. The fact that Monday and part of Tuesday saw a solid move lower, generally means that the next few days will be up. In addition, short levels are extremely high in the markets. This means the institutions will most likely push the market in the opposite direction as well, keeping a maximum of the profits on puts sold. Knowing this key can lead to avoiding many of the the pitfalls of options trading.

The markets are being carried higher today on the back of a surge in commodity prices via a weaker Dollar. The United States Oil Fund LP (NYSE:USO) is trading at $39.36, +0.81 (+2.10%). This is propelling Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) dramatically higher which in turn is carrying the Dow Jones Industrial Average. Earnings from Dell Inc. (NASDAQ:DELL) are also pushing technology shares higher.

Key areas to watch in the next few days will be beaten down smaller oil and gas plays. These plays could see significant upside should oil continue to gain for a few days.  Solar stocks along with other alternate energy plays may also see some upside on oils advance.

Gareth Soloway

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