April 26, 2017

Archives for October 2006

Expect much of the same

It should be a rather boring week for traders. With the mid-terms elections right around the corner expect to see a short-term trading range environment over the next few days. The market is currently in the middle of a fairly strong seasonal period so I would not be surprised if we tested the recent highs. However, I do expect to see a decent correction after the polls close. The market can only carry so many bearish indicators before a short-term correction occurs. Have a great night! RSI Wilder (5) for October 31, 2006 SPY - 62.2 (neutral) DIA - 51.4 (neutral) IWM - 59.1 (neutral) QQQQ - 60.2 (neutral) … [Read more...]

Trading range until mid-term elections are over?

First of all I wanted to remind everyone that the first issue of our new semi-monthly newsletter will be out on Wednesday November 1st. The newsletter will include our two current option strategy models plus one additional option strategy (Short Iron Condor) and our first stock-based ETF model. Each issue will also include articles on investment strategy tips, sentiment and technical research, and personce finance. Give it a try, we are certain you will find the information in all of your investment endeavors. We are currently offering the newsletter free for two months with any White Paper purchase. Our goal is to have Mark Hulbert, the ultimate investment newsletter resource pick up our new stock-based ETF portfolio. Currently, … [Read more...]

The Nasdaq and Russell having problems with overhead resistance

Yesterday I stated:I am more interested in the Nasdaq 100 and Russell 200 at this juncture because both are reaching an area of very strong resistance. I will be watching how these two indices perform over the coming days. If we see both indices struggle a trade could be in the cards. Well, bothindices had problems today fom the get go. Today's initial decline came on poor GDP numbers. The market worked its way back to close to breakeven only to have Goldman come out with a bad report on the semiconductors. This usually does not bode well for the market going forward. I would be surpised to see the bulls pay over here especially with next weeks bullish seasonality. I will be watching how NDX reacts to the 1730 area early next week. This … [Read more...]

Extremely Overbought

The S&P has not seen overbought conditions this extreme in quite some time. Futhermore, the stochastics that we use are almost pegged which almost always signals a short-term reprieve. We have not seen our technicals move into this type of extreme territory in years. As we into a period of seasonal bullishness (beginning of the month/end of the month) I am a little hesitant to short here. Things could change, but I would want to see sustained weakness for longer than a few hours. I am more interested in the Nasdaq 100 and Russell 200 at this juncture because both are reaching an area of very strong resistance. I will be watching how these two indices perform over the coming days. If we see both indices struggle a trade could be in the … [Read more...]

Up, up and away?

Today's price action was typical for a Fed annoucement day. Sideways trading dominates the trading day until volume dries up several hours before the Fed announcement at 2:15 EST and then the market vacillates widely for a half hour after the release followed by a directional trend into the close. The trend that lasts until the close is often reversed over the next few trading days. Chasing the trend can be risky. The S&P (SPY) and Dow (DIA) are "very overbought" while the Russell (IWM) and the Nasdaq 100 (QQQQ) seems to be struggling with some decent overhead resistance. I would not be surpised to see a reprieve over the next few days followed by the seasonally bullish end of month/beginning of the month period. As we move closer  to … [Read more...]

Fed Meeting

Trading should continue to vacillate in a tight range until the Fed report is released tomorrow afternoon so there is not much to say until that event has passed. I am working diligently on the new newsletter, particularly the new model portfolio based on EFTs (stocks only). I apologize for the short post. I will be back (maybe in the morning) tomorrow with the regular post. RSI Wilder (5) for October 24, 2006 SPY - 88.8 (very overbought) DIA - 87.8 (very overbought) IWM - 61.4 (neutral) QQQQ - 55.7 (neutral) … [Read more...]

S&P’s Wild Ride

Another bullish day for the market and quite possibly the top for the week. I write this for several reasons. First lets look at the short-term seasonal picture. Historically, the trading day following options expiration is bearish. October is the exception. The trading day following October options expiration is decisively bullish. However, the bullishness quickly ends as the rest of the week moves back to the seasonally bearish post-expiration period. Second, when the market trades in a tight range for several days and finally breaks out, the initial move is often a false move. This is more of a short-term phenomenon and I fully expect the bulls to move in at key support levels. Third, all of the other reasons I have stated over … [Read more...]

Sideways trading typically leads to sharp moves

I feel like I have been so repetitive lately, but I guess that is to be expected during periods of tight range-bound markets. Options expiration was once again uneventful (as was the entire week of trading). The S&P and Dow remain in an overbought position and the VIX is back at historical lows, closing the day at 10.63. I stated on 10/13 that "going back over the previous year whenever the VIX reached a level this low while in an “overbought” to “very overbought” position this signaled a short to intermediate-term decline. Furthermore, I looked back to see how the market reacted when all four major indices were in a “very overbought” and this was also a good signal that a short-term reprieve was right around the corner." The market … [Read more...]

Options Expiration

As expected, the market continued to trade in a fairly tight range today. Typically,  as the market moves closer to options expiration, the trading range gets tighter. However, post-expiration is a different story. Historically, the trading session (and the week for that matter) following options expiration is overwhelmingly bearish. The odds increase dramatically when the market is in an overbought state. This means that if the market holds up tomorrow the probablity of a move lower on Monday increases substantially. This could be a decent short-term play. As we all know nothing is certain in the world of trading. A disciplined approach with an appropriate stop-loss goes a long way to your success as a trader. Always define your risk … [Read more...]

What to expect as the market moves closer to options expiration

Several key economic indicators, namely the core CPI, were reported before the bell and the S&P futures responded favorably. The S&P sat in an overbought position and the move higher pushed it further in that direction. When the market sits in an overbought position like it was immediately following the opening bell, the probability of an opening gap closing increases. The large gap opening did close approximately an hour only to once again back by the end of the trading session. Typically, the market will trade in a tighter range as it moves closer to options expiration. I really do not think we will see anything different this time around. Keep a close eye on the 1360 level of the S&P and the 1700 level on the S&P. These are key … [Read more...]