Don't Forget About Monthly Options Expiration Next Week

From prior options expiration weeks, we KNOW how quickly things can change during "Opposite George" (Seinfeld reference) week.

We've seen the stock market move mostly straight up since the June 17th low and, in particular, the past four weeks. The S&P 500 hit a low of 3721.56 on July 14th and we hit a high on Thursday of 4257.91. That's more than 536 points higher in 4 weeks! Below highlights sector performance over the past month:

Enter S&P Sectors:

Because of the huge advance and the strong leadership in consumer discretionary (XLY) and technology (XLK), there are currently a TON of stocks with a large number of in-the-money calls and few in-the-money puts. This always puts stocks in serious short-term jeopardy and can lead to a quick selloff to relieve market makers of the burden of having to pay out all of that call option premium. It's the reason why we have our monthly max pain events - to evaluate the risk each month that we face as short-term traders.

If you're not aware, we now calculate "max pain" for all 50 portfolio stocks, 30 Dow Jones component stocks, and 100 NASDAQ 100 stocks to help our members assess short-term risk of holding these stocks. If you'd like to see this max pain work, which is quite extensive, be sure to sign up for our FREE 30-day trial!

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.