April Option Expiration Day

by | Apr 20, 2007 | Asset Management

Friday was a wild day — market up 130 points.

Why?  Two reasons.

First, Friday was option expiration — which always leads to
more volatility.  The most volatility occurs during expiration
week each month.

So, am I saying the market will fall from here?  No!

But it wouldn’t be a big surprise to see the market give back
some of this move over the coming days.  That usually happens
with option expiration.

Even though the Dow Jones grabs headlines, the real money has
been made over the last few years in small-cap, mid-cap and
in the international markets.

The large-cap growth stocks that make up the Dow Jones have
lagged behind these other areas — badly.

Next, we saw good earnings from Caterpillar and Honeywell…
and others, like Google.  But not all stocks enjoy the ride.

We need to be careful!

Caterpillar, Honeywell and Exxon were three big movers Friday.
These are some of the highest priced stocks in the Dow Jones.
Dow Jones = price weighted index…so the highest priced stocks
have the biggest impact.

So we’ll continue adding to commodity-based and international
ideas.  And we’ll avoid most financial stocks, savings banks,
builders and gambling stocks.


Thomas Mullooly
Mullooly Asset Management LLC
Our Only Business Is Fee-Only Investment Advice

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