For the last 40 days the S&P has traded in a tight range of about 8%. If you look at the performance of Q3 the broader index lost a little over -14%. As a premium seller this range and increase in volatility has been nice. What’s not nice is that each and every day it seems the market gaps at least a percent or more. The August lows are low hanging fruit at this point and it’s not a question of if they will be tested but rather if they will hold.

92% of the $SPX components are trading under their 5-day simple moving average. 73.4% are trading with an RSI(2) under 30 while 23.6% are trading with an RSI(2) under 10. In other words, not only is the broader market vulnerable here, there’s plenty of gas left in the bear’s tank. $VIX outperformed $VXX Friday suggesting that Theta erosion was more of a concern than a “weekend event” even though we closed on the lows in the $ES_F. Although this could also mean that everyone is already protected and their was no need to buy more protection. One thing is for sure and that is Sunday evening going into Monday’s open has the potential to be extremely volatile. Enjoy the links and your weekend!

  • The intuitive investor: An interview with Jason Apollo Voss [PsychCentral]
  • How to Fight the Four Pillars of Procrastination [PsyBlog]
  • Endogenous Testosterone Modulates Prefrontal–Amygdala Connectivity during Social Emotional Behavior [Oxford]
  • People learn while they sleep [Michigan State University]
  • Twitter as a giant global mood ring [Discover]
  • Mystical Experiences Occasioned by the Hallucinogen Psilocybin Lead to Increases in the Personality Domain of Openness [Sage]
  • People trust more those that are easily embarrassed [UC Berkeley]
  • Beware: Psychos on the street [Barron’s]