OPTIONS EXPIRATION WEEK

This post was supposed to be up Sunday night, but got delayed since my network went haywire. Lets discuss where we are, taking into account of what happened Monday night.
1. This week is Options Expiration Week, meaning that there can be some wild action, so please look for Hammers or Bullish Engulfing patterns for quick rebounds from the depths. If the market fails to recover in the early part of the week, there will be accelerated selling as Put sellers short the futures to maintain a neutral position.
2. Here's the chart of the DIA.

It's retreated 1,000 points from the high as of Monday night. If you look in August, it was when we retreated 1,000 points that we recovered through that the nice hammer. So are we going to get a hammer or bullish engulfing pattern here?
3. The SPY broke support of 144.95 in yesterday's sessions and could be heading lower to test its August lows, if it doesn't make a turnaround soon. This means the Dow could go down a full 300 points lower (Scary but plausible).
4. We'll have to see signals of a genuine bear market before altering any strategies. In the meantime, look for carry unwindings to short the Yen pairs. If you're not into shorting, then buy EURAUD as was recommended before.

For Forex traders, I'd wait for a solid rebound on the Dow before committing long positions on market beta currencies such as long Aussie, Loonie (Commodity Currencies) or long EuroYen and USDYen. With VIX in the higher 20s, things could be like a roller coaster. Already today, just before the market open, the Aussie and EuroYen were going up. Last week, on Friday, these currencies retreating spelt trouble on the Dow later that night. So will the uptrend today portend a recovery on the Dow, especially after a 680-point mauling the past 4 trading sessions? Let's wait and see.....

Rgrds,
Chief Shook