Market Outlook
The Week Beginning Monday,
August 09, 2010


I believe that it is important to point out to all my readers, especially those who are not already members of S.O.M.E. (as members are already well-aware of my trading strategy!), that the more volatile the market becomes, whether it trades up or down, is more beneficial to us, as the returns on our options increase dramatically, as observed throughout June and July, so far.

I must say I am a great supporter of the bulls, but will play-along with the bears to extract as much value from our options plays, as possible. I am a great believer in things moving forward and improving as time progresses but I also know that we have to play-the-game to extend our profits. The only catch in this type of market is “knowing” or realizing in which direction it will take, and it seems that we have been able to fulfill this decision in most cases, to gain our profitability.

Key Events This Week

up and coming

Note:-All earnings dates listed below are tentative and subject to change.

This Week’s Economic Reports

There are still quite a few major economic indicators available this week, which are:-

Monday –

• There are no economic reports slated for release today.

Tuesday –

• Preliminary second-quarter productivity,

• Second-quarter unit labor costs, and

• June's wholesale inventories.

• The Federal Open Market Committee's decision on U.S. monetary policy and

• The accompanying statement.

Wednesday –

• Weekly report on U.S. petroleum supplies,

• June's trade balance and

• July's Treasury budget.

Thursday –

• Weekly initial jobless claims,

• July's import/export prices.

Friday –

• The consumer price index (CPI) and

• The core CPI reading.

• July's retail sales,

• August's University of Michigan consumer sentiment index, and

• June's business inventories index.

This Week’s Major Earnings Reports


Monday –

• DISH Network Corp. (DISH),

• King Pharmaceuticals Inc. (KG),

• ReneSola Ltd. (SOL),

• Tyson Foods Inc. (TSN),

• WellCare Health Plans Inc. (WCG),

• MBIA Inc. (MBI), and

• THQ Inc. (THQI).

Tuesday –

• Convergys Corp. (CVG),

• Fossil Inc. (FOSL),

• JA Solar Holdings Co., Ltd. (JASO),

• Cree Inc. (CREE),

• LDK Solar Co. Ltd. (LDK),

• SunPower Corp. (SPWRA), and

• The Walt Disney Company (DIS).

Wednesday –

• Computer Sciences Corp. (CSC),

• IAMGOLD Corp. (IAG),

• Cisco Systems Inc. (CSCO),

• Pan Am Silver Corp. (PAAS), and

• Silver Wheaton Corp. (SLW).

Thursday –

• The Estee Lauder Companies Inc. (EL),

• Kohl's Corp. (KSS),

• O'Charley's Inc. (CHUX),

• Royal Gold Inc. (RGLD),

• Sara Lee Corp. (SLE),

• Wendy's/Arby's Group Inc. (WEN),

• Autodesk Inc. (ADSK),

• Nordstrom Inc. (JWN),

• NVIDIA Corp. (NVDA), and

• Red Robin Gourmet Burgers Inc. (RRGB).

Friday –

• China TransInfo Technology Corp. (CTFO) and

• J.C. Penney Company Inc. (JCP).

Outlook for This Week

week ahead

Concerns about jobs and economic recovery are expected to overshadow a strong earnings season for investors next week as Federal Reserve Board leaders meet to decide whether to further stimulate the weak economy.

On Tuesday, the Federal Open Market Committee, while not expected to alter interest rates, is widely expected to announce further measures for so-called "quantitative easing," which would keep rates low, likely boost bonds and leave equity investors guessing.

The Fed's one-day meeting Tuesday trumps everything else for markets in the week ahead, as the earnings season winds down. Retail sales, trade and inflation data are also on the calendar, but the Fed's perception of the economy and any hint it may reconsider quantitative easing have the markets on edge, particularly after Friday's disappointing July jobs report.

As stocks declined Friday, buyers flocked to bonds and yields ripped lower. The 2-year and 5-year notes hit all-time low yields, and the 10-year was yielding 2.82 percent Friday, its lowest level since April, 2009. More supply comes to market next week, when the Treasury auctions $74 billion in 3-year and 10-year notes and 30-year bonds Tuesday through Thursday.

"It's dramatic because we are now entering the period called the 'pain trade,'" said George Goncalves, chief Treasury strategist for Nomura Americas. "Everyone's been on a buyers' strike because they thought yields were too low, and now they're going to chase them even lower. People hated (10-year) bonds when they were at 4 percent, and now they love them when they're under 3 percent."

Jefferies managing director Art Hogan said the markets are now waiting to see what the Fed does, after the July jobs report showed a steep decline of 131,000 non farm payrolls. That compares to an expected 65,000 decline. The total includes the creation of only 71,000 private sector jobs, below June's 83,000. It also includes the anticipated elimination of 143,000 temporary census jobs, plus the surprising elimination of 50,000 state and local government workers.

"When (Fed Chairman Ben) Bernanke spent a couple of days on Capitol hill recently, and he downgraded the view on the economy, that was preparing us for something interesting," Hogan said.

"That puts us in a wait-and-see mode," he said.

Expectations for this Week

Market Bulls Profit from Declining Volatility and Technical Support in SPX

The S&P 500 found enough bids after its intraday selloff on Friday, to stage a late rally and closed above its 200-day moving average of 1,115, as it had done all week.

Per the 30-minute intraday chart below, the S&P 500 Index (SPX) rallied above resistance in the 1,115-1,120 region last Monday morning, but went into a low-volatility "stall" at the June highs in the three days preceding Friday's disappointing employment number. A negative reaction to the employment report briefly pushed the SPX back below resistance at 1,121 Friday morning, but an impressive rally from the lows in the 1,110 area suggests hedge funds, flush with cash, viewed the pullback as an opportunity.

The benchmark's moving average convergence-divergence is still showing a strong buy signal and the benchmark's momentum is also positive.

However, according to Vinny Catalano, global investment strategist with Blue Marble Research in New York, there are no clear signals of an upward or downward move and "right now we just got a short-term sideways trading range."

Having noted Catalano’s statement let’s view the information below!

Friday's price action was impressive, as the SPX held above intraday support from its 160-unit trendline on a 30-minute chart, which also acted as support at the late-July lows. In addition, the SPX closed the week above its 80-day and 200-day moving averages, which are situated in the 1,113-1,115 area.

This marked five consecutive closes above the widely-followed 200-day moving average, and the SPX's first weekly close above this trendline since the week after the early May "flash crash" (see second graph below).

Finally, the SPX closed back above 1,121 by Friday's close, albeit by a small margin. The 1,121 area, in addition to being the 50% retracement of the index's October 2007 peak and its March 2009 low, is also the site of the SPX's 160-day moving average, which has marked key "pivot" points this year. By the way, the 1,120 area is also a 50% retracement of the SPX's April 2010 peak at 1,220 and its July low at 1,020.

spx-since july26,2010

spx-since dec,2009

Present price action suggests that the bears are continuing to lose their grip on the market. At the same time, the June highs linger above, and the SPX still has not yet made what might be defined as a bold move above resistance.

For bulls, there is good news if the volatility forecast plays out as expected. Last week, the CBOE Market Volatility Index (VIX) closed below its 200-day moving average. If the VIX 200-day were to break as it did in early 2009, we should be in for yet another surprising rally at a time when investors are least expecting it. Investors are not presently expecting a rally, as only 30% of those surveyed in the weekly American Association of Individual Investors poll were bullish. This is the lowest reading since July 1, 2010, when only 25% were bullish with the SPX trading at 1027.37, or almost 100 points below its current level.

In addition, the volatility forecast, based on a comparison of the SPX's 20-day historical volatility (18.73) and the current VIX level (21.74), suggests historical volatility will decline in the near future, which is usually consistent with higher stock prices. In other words, I have found since early 2009 that when the VIX trades at a significant premium (80% or higher) to the SPX's historical volatility, rising volatility usually follows, which leaves the market vulnerable to a sell-off. But, when the VIX is trading at similar levels to the SPX's 20-day historical volatility, or at an insignificant premium (as it is now), declining volatility amid rising stock prices usually follows.

20day historical volatility

I continue to bullish in my approach, as there is significant sideline cash that can drive equity prices through resistance levels, but advise in continuing hedging your long positions to help weather unexpected periods of turbulence.

Economic News

The Federal Reserve’s Federal Open Market Committee The Federal Reserve’s Federal Open Market Committee will meet on Tuesday following Friday’s ugly jobs report and several other recent economic indicators that show that the recovery that started last year has slowed or stalled altogether.

Faced with ugly economic data and the prospect the economy could contract yet again, the Fed may be forced to re-open negotiations about doing direct purchases of securities as the central bank did at the height of the financial crisis, or possibly other monetary policy-based stimulus.

“Just last week, the August FOMC meeting promised to be another non-event,” said Michael Feroli, a U.S. economist with JPMorgan Chase, in an e-mail. “In the intervening period, speculation has intensified that the committee will provide more monetary stimulus – in one form or another – at next week’s meeting. The rationale for doing so is strong: both employment and inflation are, by the Fed’s own forecast, projected to remain below desirable levels for the foreseeable future.”

Investors are leaning toward the view the Fed will resort once more to some mild quantitative easing, which may be good or bad for the market.

"Bernanke himself has suggested extending the Bush tax cuts because, as he put it, the economy is still in need of stimulus. So it's not completely out of reach that the Fed next week could actually implement the purchase of more mortgages or other assets. In other words, Quantitative Easing, Part 2," said Frank Gretz, market analyst at Wellington Shields & Co in New York.

"This brings up a couple of interesting possibilities... Given that the Fed's outlook is still for a moderate recovery, the market might not like that even the Fed has turned negative -- the seemingly good news of more easing could instead prove bad news."

The Fed's policy-making committee is due to meet on Tuesday. "The Fed meeting perhaps takes on more significance following the latest jobs report," said Bill Stone, chief investment strategist at PNC Asset Management Group.

"While there is almost no chance of any change in rates at this meeting, or the rest of the year frankly, we see the distinct possibility that the Fed may announce further quantitative easing to support the economy," Stone said. "This would likely consist of rolling over any maturing mortgage-backed securities in to more purchases of Treasury bonds."

Stone's comments echoed those of economists at Goldman Sachs (GS) , who on Friday scaled back their economic forecasts for 2011 and raised the likelihood the Fed will take measures to stimulate the economy.

Goldman economists Jan Hatzius and Ed McKelvey said they expect growth in real gross domestic product to average 1.9% in 2011 versus a previous forecast of 2.5%.

Other economic indicators are expected to factor into this week, however, Michael Gibbs, director of equity strategy at Morgan Keegan said this week's jobs data and its possible effect on the Fed meeting will likely trump anything else from next week in terms of market movers.

"Unit labor costs and productivity are out Monday as well and can be a good number to watch to see if the fat corporate margins continue," said Gibbs. "Initial claims on Thursday are always important given the labor market. Retail sales on Thursday and Michigan sentiment are good numbers to take the pulse of the consumer."


Economists expect that after several quarters of steep increases, productivity is expected to slow for the second quarter to a rise of 0.3% compared with a 2.8% rise is in the first quarter. Productivity had been rising quickly in recent quarters as companies cut back on their workforces and pushed the responsibilities of existing employees.

Retail Sales Report and Consumer Price Index

Friday’s retail sales report and consumer price index may also weigh heavily on the market. Economists expect retail sales rose 0.4% in July compared with June’s fall of 0.5%. Inflation is expected to remain tame as it has been for several months, rising 0.2% in July based on the average estimates by economists.


About 90% of the S&P 500 has reported quarterly earnings so far, according to Thomson Reuters. Of those companies reporting, 75% have turned in results above expectations and 16% have fallen below estimates. The S&P 500 Index has grown by 3.7% since July 12, when Alcoa Inc. (AA) kicked off earnings season.

Sectors turning in the best results have been health-care with 83% of S&P 500 companies turning in better-than-expected results; industrials with 81% of companies beating estimates, and telecom with 78% of companies topping estimates.

Worst performing sectors include materials and energy with 28% and 26% of companies turning in results that fell below estimates respectively.

For the S&P 500, sectors that still have several companies left to report include consumer discretionary and consumer staples. According to Thomson Reuters, the S&P 500 has turned in blended earnings growth of 38% for the second quarter

Hewlett-Packard Co. (HPQ) shares will be a highlight Monday morning after the storied Silicon Valley technology company dropped an after-hours bombshell Friday, saying Chief Executive Mark Hurd had stepped down after becoming the focus of a sexual harassment probe at the company.

**While the bulk of earnings season has passed, traders will continue to get several quarterly reports from major U.S. companies next week.

Walt Disney (DIS) is the last of the major media companies to report, on Tuesday, with analysts expecting the media giant to report a profit of 58 cents per share, according to Thomson Reuters.

Cisco Systems (CSCO) will also report next week on Wednesday after the closing bell. The maker of networking equipment that is often considered the backbone of the Internet is expected to report earnings of 42 cents a share on revenue of $10.86 billion.

InterContinental Hotels’ (IHG) shares have been steadily rising this year, although analysts see 24 cents a share in earnings, down from 25 cents a year ago.

Macy's had a surprisingly strong July, and shares moved higher. Investors will focus on whether the department-store chain had to give away profits to get the business. Shares are up 16% on the year and 8.6% since June 30.

Cisco Systems will probably confirm what Microsoft (MSFT) has said: Corporate technology spending is on the mend.

Whether that helps Cisco's stock is another matter. Shares are up slightly on the year, but their Friday close of $24.07 is up nearly 13% since June 30.

Anheuser-Busch InBev will offer a chance to see how the beer business is faring. Autodesk fell 5% on Friday after Jefferies downgraded the stock, citing softness in its software outside the United States.

Penney shares are off 36% from their high in April. The company on Thursday lowered its second-quarter guidance to the lower end of 5 cents to 8 cents a share.



The Jobs Report


The jobs report came out Friday, and it was not a good one. According to the Labor Department, the U.S. economy lost 131,000 jobs in July, which was more than economists had expected. The S&P 500 Index (SPX) fell 0.37% on the day. It was a pretty disappointing report, but does it say anything going forward? Does it tend to leave a bad taste in trader's mouths for the next week, or until the next monthly jobs report? In the analysis below, we'll see how the market tends to perform in the wake of the Labor Department's monthly payrolls report.

Looking Forward

Below is a chart of the SPX since 2009. The dots on the graph show whether the monthly jobs report beat estimates (green dots) or came in worse than expected (red dots). The dots seem pretty random. In fact, there tend to be red dots at the major market bottoms rather than green dots, as one might expect.


Below is a table showing SPX returns after jobs reports, depending on whether the report misses or beats estimates. Far from scaring off investors, it seems that a weak jobs report is looked at as a buying opportunity. In the week following a report below estimates, the SPX has averaged a 2% gain and was positive 67% of the time. The average return is negative when the jobs number beats estimates. The table also shows that the SPX outperforms for about the next month as well (until the next report), averaging a gain of 2.4%.


Market Reactions

Evidently, whether jobs beat or miss expectations is not a good predictor of market action. I thought maybe the way traders initially react to the data would tell us how they'll feel moving ahead. The table below shows the SPX returns after a jobs report, but this time the returns are broken up by how the market did the day the report came out. Last Friday saw the SPX fall moderately by 0.37%. The table shows that when the S&P has a relatively calm day (plus or minus one percent), you see very good returns in the week (and weeks) ahead. The market has underperformed when the SPX moves big in either direction on jobs-report day.



It appears that past jobs reports are not good indicators for trading. Determining the reaction to the reports is not always very straightforward. In fact, there was a time when traders would react positively to a negative report because they thought it would encourage the Fed to stay with an easy money policy. I don't think that's in the cards anymore, as the Fed is highly expected to keep rates low unless something very abnormal happens. The biggest risk with these jobs reports seems to be that they continue to be poor, and investors head for the hills -- supposing that the economy is headed for a double dip recession as there is little else the Fed or anyone else can do about it.

***Further evidence of market conditions can be seen in representations of charts below.

Tracking of SPY, DIA, IWM and QQQQ


The general indexes spent the majority of the week in a tight consolidation before a disappointing employment report sparked some selling pressure. While the markets began backing away from an established resistance area formed by their June highs, by the end of the day on Friday the markets had recouped a large portion of their one-day declines. This was an impressive display put on by the bulls. The general indexes remain above their 20-, 50-, and 200-day moving averages with multiple levels of support beneath them. They closed out the week well above last week's close.

The S&P 500, as represented by the S&P 500 SPDRS (NYSE:SPY) ETF, encountered selling as it approached $113 this week, and this is now the level that needs to be watched on the upside. $113 halted the June bounce as well and bears are likely keying on that level as a near-term line in the sand. If SPY can consolidate and rally through this level it could cause some short covering and help provide fuel for a breakout. Looking below, SPY pulled back into this Monday’s gap higher, which acted as support on the first attempt. While the key levels to watch are much lower, SPY could also find support near last Friday's low of $109 if weakness sets in next week. Ultimately, SPY remains in a large trading range with clearly defined levels on both sides.


The Diamonds Trust, Series 1 (NYSE:DIA) ETF, which tracks the Dow Jones Industrial Average, is presenting an interesting dilemma. While SPY remains below important resistance, DIA was able to clear resistance earlier this week, which resulted in a higher high. If DIA can find support near the breakout area, this would confirm the breakout and likely lead to a test of the April highs. Traders need to keep an eye on last week's low, as a drop below this area could result in a failed breakout.


,br> It’s interesting that while the Nasdaq, as represented by the Powershares QQQ ETF (Nasdaq:QQQQ), failed to reach its June high, it was able to clear a down trendline that was marking the past few pivot highs. The June high is still the most important level to watch on the upside, as clearing it would set a higher high, but clearing the down trendline was a step in the right direction. Much like the other indexes, last week's low, and then $44 below that, remain the key levels to watch.


The Russell 2000, as represented by the iShares Russell 2000 Index (NYSE:IWM), is showing some relative weakness. It is the only index that failed to clear last week’s highs and was the first to test last week's low. IWM is an important ETF to watch as it represents 2000 small cap stocks whose health is critical to a sustainable rally. The $64 level is an area for traders to watch, as a break below this area could cause weakness to spill over into the other indexes. The $67 area has contained the past few rally attempts and would be the key level to watch on the upside.



The bulls have been showing resiliency over the past few weeks, as most selling pressure has been quickly absorbed. What could have snowballed into a reversal this week ended up being just another day of consolidation. The longer the markets consolidate just under resistance, the more likely it becomes that they will eventually break out. The key levels to watch on the upside are clearly defined and traders need to be patient and let the markets prove themselves. If the indexes can set the higher high in the coming days, it would effectively end the correction that began in April. We mentioned a few weeks ago that traders need to be open-minded about a possible bottom being formed, and the recent action can only be labeled as bullish. While the markets could fail in this area, the odds are slowly shifting toward the bulls.

Tracking of Stocks Poised To Excel


With the markets looking like they are attempting to end the correction that began in April, traders are faced with the dilemma of where to put their money to work. While many traders will look for “value” plays or beaten down stocks, they are often better served simply looking for stocks emerging from a healthy base. A base is the result of a healthy consolidation, and is typically an important prerequisite for a stock emerging into a new sustainable trend. A healthy base often takes time to develop, and sloppy bases will often result in failed moves.

Once a stock emerges from a healthy consolidation, the base will usually serve as a strong support or resistance level because that area is filled with other traders who missed the breakout and are anxious to not miss a second opportunity. While there are no guarantees that the markets can form an important low here, it is still a good idea for traders to start putting together a list of stocks building healthy bases.

Radware (Nasdaq:RDWR) is an example of a stock that has remained in a healthy consolidation despite a sharp decline that likely scared many investors in late April. The $18 level held on a couple of occasions and RDWR has started to trend toward the top of the base. The $24 level is the clear top of the range, and will be the area to watch for an upside breakout.


Lattice Semiconductor Corporation (Nasdaq:LSCC) is another stock that has been able to build a healthy base despite the weakness in the general markets over the past several weeks. LSCC tested the $4 level on a couple occasions and quickly found buyers willing to support the stock. It is also starting to trend toward the top of its base, so the level to watch on the upside will be near $6.


While Compass Diversified Holdings (Nasdaq:CODI) suffered through a very sharp decline during the flash crash in May, it quickly recovered and never came close to revisiting those lows. It consistently found buyers near the $13 level despite many attempts to breach this level. Recently, it was able to clear a trendline that was marking the highs of the past few rally attempts and appears to be close to testing its April high near $15.50. This will be the level to watch for an upside breakout.


While the chart for Medifast (NYSE:MED) doesn’t resemble the three mentioned above, the price action is consistent with a stock that is in a base. In fact, MED appears to be building the right side of a cup and handle. Technically speaking, the pattern won't be confirmed until MED clears the top of the handle near $37.50, however, the recent price action is hinting at a test of this level. Notice that MED was able to clear the channel it was following as it drifted lower through early summer. Currently, MED is holding just above its 50-day moving average; a move above $32.50 could lead to a quick test of $37.50.



While it probably isn’t a good idea for traders to rush into these stocks just because they have shown relative strength, they are worth watching to see if they can emerge from their bases. If the markets do indeed end up forming an important low, these stocks will be a good place to look for continued leadership. Stocks that are emerging from a healthy base should be less prone to a failed breakout, as shares have already been exchanging hands prior to the breakout. Fewer traders will be looking to cash in for a profit, and will be holding on for bigger gains instead. Pullbacks theoretically will also be met with either new buyer’s who feel like they missed the boat, or existing holders adding to positions. The key for traders is to remain patient as the markets continue to stabilize, and then be ready to act on the stocks that have shown strong institutional support.


Stocks finished the week higher, helped by a reversal of early Friday's steep losses. The Dow was up 1.8 percent at 10,653, and the S&P 500 was up 1.8 percent at 1121. The Nasdaq was up 1.5 percent at 2288, but the Russell 2000 was down 0.2 percent on the week at 650. The dollar also weakened, setting a three-month low against the euro and approaching a 15-year low against the yen.

The major indexes are all ahead on the year. Plus, the S&P 500 finished the week both above its 200-day moving average as well. That's considered a key measure of investor confidence.

Stock traders, meanwhile, are debating whether the summer rally has run its course, now that earnings season is coming to a close and the economic data remains weak. By Friday, about 90 percent of S&P 500 companies had reported, with profits rising an average 38 percent. Seventy-five percent of the companies reporting beat earnings estimates. Among the companies reporting in the coming week are Cisco, Disney and some of the major retailers, like Macy's.

"I think they've (stocks) run a little too far. We're not terribly surprised by some pull back here. This has been, and can be perceived as, a short covering rally," said Tobias Levkovich, chief U.S. equities strategist at Citigroup.

The bullishness is not so much about the economy's strength, some analysts suggested, but about how companies are able to generate strong profits in a dodgy economy.

In addition, health care stocks were the market's leaders because investors believe Republicans will take control of Congress in the November election and try to gut the reform bill passed earlier this year.

Levkovich said earnings though have been a positive. "They've definitely been good. The question is really is it sustainable?" he said.

He notes that when stocks began to sell off in April, a contrarian measure he watches was at a high, and it is getting close to the same level now. He notes that in late April, 70 percent of analysts' earnings revisions were to the upside. As the market fell, that number declined to a level of about 45 percent in June, and negative revisions outweighed the positive. At that point, the market was about to rally back. Currently, he said the level of positive revisions has risen again, to a level of about 65 percent.

Levkovich expects stocks to stay choppy through the summer, but he says they could bounce after the mid-term election.

"The market is going to have to process the mid-terms—the lame duck session and how we're going to process the Bush tax cut expiration. That's pretty meaningful for 2011 prospects. That's the elephant in the room," he said.

options action


U.S. stock investors are turning more to options for protection after the latest data showing the frailty of the economic recovery, but they may find some comfort in Wall Street's "fear gauge."

After a dismal July payrolls report, options investors are busy buying protective puts on a popular exchange-traded fund that tracks the S&P 500 index .SPX, but the CBOE Volatility Index .VIX suggests there is no need to be too concerned.

Protective put options in the SPDR S&P 500 fund (SPY.P), also known as the SPYders, were a favorite among traders after a larger-than-expected drop in July U.S. non-farm payrolls fueled worries that the economic recovery was faltering.

Put options are generally purchased as a protection against a market decline.

According to Trade Alert, an option analytics firm, the top five of the 10 most active contracts on Friday were put options on the SPYders.

The ETF fell 0.4 percent to $112.41.

But the VIX fell 1.6 percent to end at 21.74 as the market bounced much of the way back despite the jobs data and closed well off the lows of the day.

"We are at the tail end of the volatility aftershock that peaked on May 20 at just over a 45 reading in the VIX," said MKM derivatives strategist Jim Strugger.

"At this point in the cycle, the market psychology should be resilient."

Strugger expects volatility to decline in coming weeks, with the spot VIX sliding through 20 in late August and September to reach the 15 to 18 range.

The VIX, a yardstick of investor anxiety, is a 30-day risk forecast of stock market volatility. The index typically has an inverse relationship with the S&P benchmark as it tracks option prices that investors are willing to pay as a protection on the underlying stocks.

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