Republic Risk: Down Goes Energy

In a bizarre turn of events, energy and technology stocks both take a beating simultaneously. Are utilities stocks next? Let's hope not...

Dear Fellow Expats:

I’ve been eating cold-cut subs and watching the S&P 500 die in the sun.

As expected, we gapped up in the morning, retested key levels, and spiraled lower.

Then, at 1:25, the SPX hit the third standard deviation band I briefly mentioned this morning. What happened? This happened.

This quick tap of the third deviation - helped spur an algo-driven buying bid.

Why does this matter?

The S&P 500 ETF (SPY) allows traders to take advantage of these sorts of moves on the index. The SPY $468 call for January 5 (today) went from $0.28 to $0.71 (152%) in about 15 minutes. That’s why we talk about the deviation bands on Fridays.

We’re always looking for these sorts of moves.

You just have to know how to manage your risk.