The markets are selling sharply on the best volume of the week. The healthcare vote this weekend looks like it might pass and the markets are getting jittery. The markets hate change and worry about continued government reckless spending. In addition, there will be new taxes imposed on capital gains which hit directly at the core of Wall Street.
While the markets seem to be in a slight panic over health care reform that may pass, options expiration is also at work. The institutions will push the market one way to take out the puts and then flip flop to go the other way, taking out the calls. In the end, the institutions, who sell the majority of puts and calls, look to close the stocks as close to the strike price as possible to maximize profits. The games in the market rage on. Know the rules.
Stocks on the move today include Google Inc. (NASDAQ:GOOG) and Baidu, Inc.(ADR) (NASDAQ:BIDU). Google Inc. is set to let the world know its future plans on Monday. They are expected to pull out of China. While most would think that it may cause a price spike in Baidu, I would caution that the news is essentially factored in the price of the stock. Should any other announcement come out of Google Inc. about them not totally pulling out of China, Google would spike and Baidu would most likely drop sharply.
The Boeing Company (NYSE:BA) reported that they were going to be increasing production of their commercial 747 and highly-profitable 777 series airplanes. The stock jumped early but is already falling back. Technically speaking, which is my language, Boeing is extremely extended and may have put in a short term top. The key is going to be $73.30. As long as price stays below that level, the stock could continue to fall in the coming days and weeks. Often times a final spike flushes out the weak handed shorts but also signals a top. This is possible on Boeing at these levels based on the daily chart.
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Chief Market Strategist