* Putting The SPX 2% Drop into Perspective: This May Shock You... Because It's Not Shocking

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Let's put context around today's 2.0% loss in the SPX. First, here are the daily returns in the SPX since 6-30-2013, ordered from lowest to highest.

Provided by Yahoo! Finance & Charles Schwab optionsXpress

I do note that while there have been 5 days of -2.0% returns or worse, there has only been one up day of that magnitude.





We can see that today was bad, but not sooooo bad.  In fact, there have been four worse days in the last 13 months and three worse days in just 2014. Here are the top 10 largest gains and losses on a daily basis in SPX over the same period.


Provided by Yahoo! Finance & Charles Schwab optionsXpress

Is a bear market coming (or already started)?  Maybe... I mean, I ain't long and the violent shift in momentum (Read: Collapsing Market Momentum in 3-charts) is definitely noteworthy.

But, was today crazy-crazy bad?... Not really...

One last thing to note: July was a down month, but that should not have been a big surprise. Remember this post from June 25th, 2014:

* 10 Facts that May Rock Your World: Has the Last Year Been an Artificially Driven Stock Rally?


This is trade analysis, not a recommendation.

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

7-31-14: End of Day Report - Largest Stock Moves, New 52 Wk. Highs/Lows, Unusual Option Volume

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Top Headlines
* Wall Street hammered, Dow closes down more than 300 points

* Argentina blames US, 'incompetent' judge for default

* Ackman Says ‘My Bad’ on Herbalife Presentation



Top option Story
*  LinkedIn (LNKD) - Earnings Preview: Why the Stock May Move Big; And Why It Might Not

* Collapsing Momentum in 3-Charts; Why Today Was Predictable; Why The Bull May Not be Dead

Open Interest
* Daily Open Interest Report

Covered Call
* Daily Covered Call Report

Biotech Index
* Daily Biotech Small & Micro Cap Update

Market Overview

Largest Stock Gainers



Largest Stock Losers



New 52 Wk Highs in S&P 500



New 52 Wk Lows in S&P 500



Unusual Option Volume



Elevated Implied Volatility (IV) to Historical Volatility (HV)



This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

7-31-14: Daily Biotech Small & Micro Cap Update

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The Ophir Gottlieb Small Cap Biotech Index
Is this the biotech revolution or the biotech bust?



Small cap Bio-techs were down ~2.3% today as a group as the SPX, NASDAQ and DJIA each fell ~2%.  Of the 20 largest absolute stock movers today, 17 were down.  But... it's interesting to note that none of the index constituents moved more than +/- 16% on a day when the broader market imploded.

Notable Stock Movers

AMRN	+13.21%
PGLA	+7%
ACRX	+6.75%
INSY	-10.14%
TNGN	-14.71%
ANIK	-15.46%

Unusually Heavy Option Volume

AMRN:	3181% of daily average
INSY:	1416% of daily average
LGND:	932% of daily average

231 small / micro cap biotech and pharma companies (equal weighted):

• Public Biotech and Pharma Companies
• Trade on North American Exchanges
• Market Cap Range: [$0, $2 Billion]
• Price, Employees, Revenue Range: Any

More on index construction and performance: The Ophir Gottlieb Small Cap Biotech Index

Today's Biotech Index Stock Movers



Today's Biotech Index Unusual Option Volume



Full Index Constituents and Moves




This is trade analysis, not a recommendation.

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

* LinkedIn (LNKD) - Earnings Preview: Why the Stock May Move Big; And Why It Might Not

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LNKD is trading $181.54, down 3.1% with IV30™ up 1.0%. The Symbol Summary and everything else is included below.

Provided by Livevol

------------------
Update 8-1-2014 (one-day later)

Provided by Livevol

LNKD Stock has moved more than the option market priced.  Even in a rather strong downwind, the upside move was more abrupt than reflected by the options.

Earnings Highlights
Revenue: $533.9M (up 46.8%) vs $512M consensus
'Adjusted' Net Profit: $0.04 EPS vs. $0.00 consensus

Details: ZACKS via Yahoo! Finance LinkedIn (LNKD) Beats Q2 Earnings; Ups FY14 Revenue Outlook
------------------

Conclusion
The option market reflects a price range of [$168.50, $196.50] after earnings today and there are equally arguments as to whether or not that range is too wide or too narrow.



Pardon the brevity of the post, but it's almost earnings time.

The implied volatility is the forward looking risk in the equity price as reflected by the option market (IV30™ looks forward exactly 30 calendar days). In English, the red curve (above) is the risk in future stock price movement.

We can see that LNKD implied volatility (risk into earnings) is the second lowest it has been in the last two-years (see the yellow circles -- today is the second lowest).

Let's turn to the 2-year Stock Chart:

Provided by Charles Schwab optionsXpress

We can see that LNKD follows very long trends of stock movement in one direction.  It's much less "flip-floppy" than some of the other MOMO names (see TSLA for example).  That lack of whip-saw stock movement does make a reasonable circumstantial argument for implied volatility (risk into earnings) to be lower now than it has been in the prior quarters of earnings releases.

So there's an argument against a big stock move.

Having said that... and please don't trade on this opinion, I am not trading on this opinion at all... The option market reflects a price range of [$168.50, $196.50] after earnings today and I think LNKD may be set to move more than the option market is pricing.

Perhaps not the single day move, but the move out to Aug15th (monthly expiration) which shows a price range of [$164.50, $200.50] may be vulnerable.

• If you believe the stock will be outside that range on expiry or any date before then, then you think the volatility is too low.
• If you believe that range is too wide, and that the stock will definitively be in that range on expiration, then you think volatility is too high.
• If you're not sure, and can make an argument for either case, then you think volatility is priced just about right.

Why do I think the move could be greater?... Simply because the market is very volatile right now and hyper focused on social media in particular (FB, TWTR, YELP) and MOMO in general.

The momentum collapse (Collapsing Momentum in 3-Charts; Why Today Was Predictable; Why The Bull May Not be Dead) is incredible.

But, since that rationale is based on "everything other than the stock itself", I am not compelled to trade this one.

This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

* Collapsing Momentum in 3-Charts; Why Today Was Predictable; Why The Bull May Not be Dead

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This is a post dedicated to market internals, and even more myopically, market momentum.  The drop in the market of late (and today in particular) is not a surprise for those that read this post from the weekend:

Preparation: Must Know for the Week to Come; Must Know from Last Week

I'm going to share three charts and one table (all from barchart.com).  But none of it matters to me... except for one...



First, a summary:

Provided by BarChart

Essentially every measure of momentum with respect to daily moving averages (dma) was at or over 70% as of one-month ago.  Look at that last line boxed in blue: 20dma, 50dma, 200dma.

And today, at the top of that chart, those numbers are all below 50%.  Scary?... Well here's a chart:

Provided by BarChart

This chart puts in a picture the last year of the 20 day moving average.

• Today: 23% above 20-dma
• Last Month: 70% above 20-dma
• 52 wk Low: ~17%

Does this scare me?... No.

The 20-dma is very volatile as we can see in the chart and in fact has been substantially lower in the last year while the market has gone up.

Now a chart of the 50-dma for the last year.

Provided by BarChart

• Today: 32% above 50-dma
• Last Month: 77% above 50-dma
• 52 wk Low: ~29%

Does this scare me?... No.

The 50-dma is also volatile, although certainly not as much a the 20-dma.  The 50-dma has also been lower in the last year.

And finally, the 200-dma chart.

Provided by BarChart

• Today: 47% above 50-dma
• Last Month: 68% above 50-dma
• 52 wk Low: Right Now (prior was 52%)

Note how the 200-dma chart is much less volatile than the shorter time periods.  Note also how the 200-dma is well into a new annual low. 

This one matters to me b/c the annual low was still above 50%. 'Was'... But:

• This number hit 36% in Nov 2012
• This number hit 9% in Oct 2011

So, a one-year chart looks awful, but a three-year chart actually looks pretty stable.

Does this 200-dma chart scare me?... No.

In fairness, very little scares me in the market other than huge up swings (how odd is that?).

Does this mean anything? I believe it does. This move down has been building for several weeks (see all three charts) and is on the back of:

• Economic Data
• Earnings Data
• Geopolitical Fears

I believe #3 is the biggest catalyst and we have no idea what that will do in the future.  We do know in the past, it has been 'much a do about nothing' (thanks William).  In other words, the market has shrugged it toff and then risen higher.

This time... I believe it will not be the end of the world (hyperbole of course).
But last time I did... and I was dead wrong.

When will the bull end (in my opinion)? Watch. The. Rates.

This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.

7-31-14: Daily Open Interest Report

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Daily Option Interest Report


This information is available via optionsXpress Toolbox --> Dragon

Notable One-day Option Position Increases

AGIO	+2220%
ALDW	+2105%
PBPB	+2103%
Full List Below

Notable Large Option Position Increases Realtive to 3-month Average

UEIC	+734%
PNY	+671%
RUBI	+660%
Full List Below

Largest One-day Open Interest Increases



Largest Current Open Interest Relative to 90-day Average




This is trade analysis, not a recommendation.

Follow @OphirGottlieb

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Legal Stuff:
Options involve risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade options, and must meet suitability requirements.

The information contained on this site is provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation. Consult the appropriate professional advisor for more complete and current information. I am not engaged in rendering any legal or professional services by placing these general informational materials on this website.

I specifically disclaim any liability, whether based in contract, tort, strict liability or otherwise, for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with access to or use of the site, even if I have been advised of the possibility of such damages, including liability in connection with mistakes or omissions in, or delays in transmission of, information to or from the user, interruptions in telecommunications connections to the site or viruses.

I make no representations or warranties about the accuracy or completeness of the information contained on this website. Any links provided to other server sites are offered as a matter of convenience and in no way are meant to imply that I endorse, sponsor, promote or am affiliated with the owners of or participants in those sites, or endorse any information contained on those sites, unless expressly stated.