August 20, 2017

Archives for April 2006

Sell in May and Go Away?

I guess we should revisit the question I posed yesterday; Could this be the final stages of the 2006 bull rally? Or is it the beginning of a sustainable move to historic highs? Well, the "sell in May and go away" theory doesn't really start until the fourth trading day of the month. The first three trading days of May have been historically bullish. If the seasonal pattern holds true again this year, and that is a big IF, then we could be in store for another nice setup. Currently the SPY and DIA are overbought and a few more days to the upside could push them into "very overbought" territory, which is usually a good time to start looking at in-the-money puts for a short-term play. I would much rather see a "very oversold" condition as it … [Read more...]

Bernanke Rally

The day started lower on news of a rate hike in China, however, Bernanke saved the day by stating, "there's always the possibility that, if there's sufficient uncertainty that we may choose to pause simply to gain more information, to learn better what the true risks are and how the economy's actually evolving." This led to a sharp rally in the major indices, especially the S&P 500. The rally led the S&P into overbought territory intraday and as expected it was unable to hold at those levels. Could this be the final stages of the 2006 bull rally? Or is it the beginning of a sustainable move to historic highs. I tend to side with the Bears, at least for the short-term. With the summers months right around the corner and lots of noise to … [Read more...]

Moving ever so closer

Not much to say tonight. I am still looking for a decent decline to move a few of the major indices back into oversold territory. With DIA moving higher and nearing overbought and the QQQQ moving closer to oversold we could see QQQQ and possibly SPY reach oversold tomorrow. If this occurs a high-odds setup could be in the making. As I have stated before patience, patience patience. I am not in a hurry, the market isn't going anywhere, but if I jump in without a substantial reason to trade my losses could. Until tomorrow.  RSI Wilder (5) for April 26, 2006 DIA - 66.5 (neutral) SPY - 49.5 (neutral) QQQQ - 37.2 (neutral) … [Read more...]

Post Expiration Blues

The price action during post expiration week has been weak to say the least. While declines in the major market indices have been limited, there seems to be a few fundamental and technical indicators that are flashing bearish signals for the short-term. Given these signals, I would not be surpised to see DIA, QQQQ, and SPY move into oversold territory. The bulls are certainly not going to give up without a fight, but it seems, at least for the short-term, they are somewhat tentative. If all three happen to move into oversold territory I think we could be in store for another high-odds trading opportunity. The next few days should be interesting to say the least.  Daily Articles of Interest . what you wish for  RSI … [Read more...]

The Day After

As I have stated repeatedly over the past few days, the Monday following option expiration is historically bearish. Today lived up to the billing although the decline was minimal. The day began with a sharp sell-off , but the bears could not sustain the trend lower. This was surprising given the current price of crude and the sharp decline in the Japanese markets. The Nikkei experienced a 2.8% decline , the largest one-day decline in two years. Events like this usually have an effect on the US markets, which is why I am surprised the decline was so limited. Daily Articles of Interest Option Greeks a Year  RSI Wilder (5) for April 24, 2006 SPY - 65.3 (neutral) DIA - 73.4 (overbought) QQQQ - 40.7 (neutral) … [Read more...]

Option Expiration

The week of option expiration happened to be kind to the bulls. The march upward began Tuesday after Fed minutes were released. Within the report the majority of policymakers stated they "thought that the end of the tightening process was likely to be near, and some expressed concerns about the dangers of tightening too much, given the lags in the effects of policy." The news led to the largest one-day advance for the Dow since April 2005 and helped to push the market higher throughout the week.   Options Expiration is your state?     RSI Wilder (5) for April 21, 2006   SPY - 74.4 (Overbought) DIA - 77.8 (Overbought) QQQQ - 42.0 (Neutral) IWM - 64.9 (Neutral)     … [Read more...]

The Day Before Expiration

Over the past year the day before expiration has been, for the most part, directionless. However, the day after expiration is a much different story. The day after expirations has historically been a bearish day and particularly in April. Hopefully, I can capitalize on this seasonal phenomenon tomorrow. If the market manages to hold at current levels the probablity of a bearish Monday are even greater. Given the current overbought situation in DIA and SPY, any move higher will mostly likely be limited and quickly sold off. I have seen stranger things happen but this seems to be the pattern of late.  Daily Articles of Interest   An excellent primer for the newly initiated. Retirement Locales Trade Goes Awry RSI Wilder (5) for … [Read more...]

Typical Consolidation

Today was the typical consolidation day immediately following a nice rally. As we all know anything can happen with only two days left until expiration. With oil settling at $72.17 today and a CPI number that was not nearly as good as the market anticipated, the market could have problems holding at current levels for the short-term. After a late post after an extremely busy day I am going to bypass the "daily articles section" and RSI Wilder (5) information. I promise I will make up for it tomorrow with some interesting articles. Also, I plan on revamping the daily content section of the blog (provide more content)  and would love to hear any thoughts or ideas for the blog. Take care. … [Read more...]

Largest One-day Advance since April 2005 amid Record High Oil Prices. What next?

What a day! The market opened higher on positive inflationary news. The Labor Department reported a modest increase in core prices of 0.1%. The good news continued at 2:00 EST when the FOMC released the minutes of their March 27-28 meeting that stated "the end of the tightening process was likely to be near, and some members expressed concerns about the dangers of tightening too much, given the lags in the effects of policy." As a result of all of the postive news the Dow (DIA) witnessed its biggest one day advance since April 2005. The one bearish aspect of today's market was the record close of crude oil at $71.35. This could pose (and most likely will) a threat to a sustained rally. There are several other technical indicators that … [Read more...]

Options Expiration Week Begins

As I mentioned last week, the Monday Following Good Friday has a seasonally negative bias. Well, once again it looks as though that indicator held true and now the major indices are either back into oversold (SPY) territory or fast approaching (DIA and QQQQ). Another declining day would bring all three into oversold or possibly very oversold territory which could make for a nice short-term trade to the upside. I would prefer to see a decent decline over the next day or two before I attempt to establish any positions. I want to make sure each trade has a high probablity of success. Obviously not every trade will work (that is a ludicrous thought) but if we can increase our odds of success by patiently waiting for nice set-ups then we will … [Read more...]