The markets will most likely have an up week for one main reason. It is options expiration. Institutions sell a majority of options to the public and to various funds. These institutions have a bias towards wanting those options to expire worthless, thus the entire premium is profit. The more put options (downside expected) are bought in the month and weeks prior to an options expiration, the more likely the market will go the opposite way into options expiration. Driving the price of a stock out of the money is a favorite past time of institutions. They can make billions this way over the course of a year. Learn how to make money on this game played by institutions. Take the seven day free trial of the Research Center. Click here.
Over the last month, the markets have started to get jittery. The downside is something seen much more often as the Dollar has rallied strongly off the lows and the Federal Reserve winds down their print money policy of QE2. As this has happened, short interest has increased dramatically in the market. This implies many more puts have been bought over the last month as well. What stocks can be bought for this weeks bounce? Click here to take the seven day free trial of the Research Center.
Knowing the downside is being favored by the retail investor through shorts and puts, it is likely that this week will end flat to higher as the institutions try and capitalize on the options game. While this week should end higher, the market most likely will resume its downward trend following this week. When the downside resumes, be ready to profit by taking the seven day free trial of the Research Center.
Related Stocks: International Business Machines Corp. (NYSE:IBM), Chevron Corporation (NYSE:CVX)
Chief Market Strategist
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