Index Option Trader

Archive: January Market Analysis Update

As we wait for the market to enter into a prime entry zone for our January trade, I thought that I would reflect on the market conditions of late. As far as the first trading day of 2008, it was a complete downer to the tune of 220 points to the downside. A poor ISM report and nervous comments from the FOMC minutes aren’t adding any positive marks to the bull’s cause.

In terms of economic reports, we have Auto Sales, ADP Employment, Jobless Claims and Factory Orders on Thursday and Nonfarm Payrolls, Unemployment, Hourly Earnings and ISM Services on Friday — a few of which are market moving numbers. And if the volatility measure (VIX) wasn’t high enough, add to the mix $100/barrel crude, record high gold prices, the ever popular credit crisis, and a slew of corporate earnings due in the coming weeks from names like CELG, STZ, GAP, KBH, SCHN, APOL, HELE, TONS, AA, RT, MTB, MTG, IHS, SHFL , PAY and INFY.

We are in store for quite a volatile beginning of the year. While heightened volatility is usually a positive environment for premium sellers (option writers), too high a reading can make for very unfavorable risk to reward setups. Remember the market is usually efficient at all times, providing option writers with the right amount of compensation for risk taken at any given moment.

Also, our Chief Research Strategist Anthony Tsung, has authored an informative piece entitled Waves of 2008. It is a general equity market overview pertaining to the following topics:

* Corporate Wealth, Profits, and Tops?

* China and Ford Motor– The Big X factor

* UAE - Economics

* Agricultural Inflation—a very brief look into the popular “Agflation”

* The Link between U.S. and everyone else in Trade

* Monetary Index – Surprising moves that go unheard

* Putting it all Together – Bear Market is not a Recession – what the investment public has yet to mention in public. –The other X - Factor

* Conclusion: Why a Bear Market may not necessarily be a Recession

Waves of 2008 - Click or copy and paste the following URL into the title bar of your browser to view.

http://www.indexoptiontrader.com/download/waves_of_2008.pdf