BigTrends

There looks to be a lot of November Expiration related "pinning" going on as we head into Friday's close.

The S&P 500 (SPY) is starting to move towards 110 ... a last hour spike to that level would be likely a "false" pin that would be reversed on Monday, in my view.

Many big equities are moving right towards strike price pin levels, including (AAPL) at 200, (GOOG) at 570,  (RIMM) at 60, (DIS) at 30, (AIG) at 35, (FITB) at 10, (NFLX) at 60, (AMZN) at 130, (COST) at 60, (DISH) at 20, (MON) at 80, (HPQ) at 50, (KO) at 57.5, among others.

As we've previously mentioned, this kind of "pinning" action, where a stock closes right around an option strike price on an Expiration Friday is due to a variety of factors.  Among these are technical, manipulation, psychological, but also the actual option open interest at these strikes.  The open interest causes market makers and hedgers to buy and sell the stock around those levels to keep the books balanced (delta neutral, etc).

We've seen it time and time again, and this afternoon looks like no exception.

One longer-term indicator I've watched with interest is the Uptick Rule (in which stocks cannot be sold short without first having an uptick). This rule was put in place in 1938 after the sharp drop in 1937, as a means to slow down the crash-like drops that can cascade very quickly without such a barrier in place.

Isn't it interesting that the uptick rule was eliminated on July 6, 2007? Note the sell arrow on the chart of the Dow "Diamonds" ETF (DIA) which trades about 1/100th the value of the Dow Jones Industrial Average on that date. The uptick rule was eliminated as it was claimed to be a relic that modern technology no longer required.