From Cabot Options Trader
The Week in Review
The S&P 500 and the Dow finished higher for the eighth consecutive week with modest gains of 0.06% for the S&P and 0.13% for the Dow. The Nasdaq led the major indexes, finishing up 1.71% for the week.
For the bulls, it was another solid week as the markets continue their rise. Helping the bull case this past week, Case-Schiller home prices rose 1% month over month with all 20 cities surveyed seeing gains, Consumer Confidence came in better than expected and Spain’s economy officially expanded in the third quarter after nine straight quarters of contraction.
The bears could shrug off this weeks modest gains on light volume and point to disappointing data such as October Durable Goods orders continuing to be weak, October Pending Home Sales falling for a fifth straight month and German and French October retail sales falling month over month for the fourth month in the past five.
The Chicago Board of Options Exchange Volatility Index (VIX) finished a quiet week at 13.70. It’s difficult to make any volatility assumptions during these light-volume holiday weeks; we’re likely to get a better read on the fear in the marketplace this week.
Events for the Week to Come
This week we will see a flood of economic data including:
New Home Sales
Monthly Jobs Report
With that much economic data due this week, it’s difficult to say which will be most important, though Friday’s Monthly Jobs Report will certainly garner the most headlines.
What Traders are Saying
The traders I talk to are now focused on how the year will end. Will stocks such as Boeing (BA), which is up an outstanding 78% year to date, continue to outperform into the end of the year? Or will traders lock in gains in such winners?
Or how about stocks that have grossly underperformed such as Caterpillar (CAT), which is down 5.5% for the year? Will this stock continue to be sold as money managers don’t want to show ownership?
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