Market Slides Toward Maximum Pain

Yesterday stocks were stung as the nuetral market trend gave way to pressure from options sellers using higher energy prices to dip prices toward maximum pain levels for this Friday's options expiration. Maximum Pain is the price point where the maximum amount of dollars will be lost by option speculators. When the market trend is near neutral option short sellers can control stock prices and "park their cars" on strike prices which extract the most money from the speculators. For the QQQQ (NASDAQ-100 Index), the Max Pain price this month is 39. For the OEX, it's 570. QQQQ closed Wednesday at 39.19 and OEX at 567.41. We expect that yesterday's harsh sell off, which showed little mercy to UBET, will ease up and we may even get a small bounce. The market is most likely to trade relatively flat moving into the end of the week. Longer term the trend is still up so next week we may see some good upside as option sellers release thier grip.