Have a Wonderful New Year!
December 26, 2006
I hope all of you have a safe and wonderful New Year! There will be no posts this week so we will see you all in 2007!
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Seasonality should begin to take over tomorrow
December 21, 2006
The higher-beta Russell and Nasdaq 100 have once again reached oversold territory and conveniently right as the year-end seasonal bullishness historically begins. That was a mouthful! QQQQ is back near an important area of support and given the strong seasonal bias that lies ahead I think buyers will step in over the next few trading days to push the market back near the recent highs. SPY has also reached a similar level so both should be watched closely over he next day or so. If the market is unable to hold support then we could see a Christmas correction that most likely will last for several weeks. I am not expecting to see this type of action as buyers have recently been very reliable when the indices have reached strong support areas. Couple this with the strong postive seasonality that I mentioned earlier and I think we could get a nice push over the next few days.
RSI Wilder (5) for December 21, 2006
- SPY – 41.6 (neutral)
- DIA – 53.3 (neutral)
- IWM – 26.1 (oversold)
- QQQQ – 26.1 (oversold)
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Holiday Bull?
December 20, 2006
RSI Wilder (5) for December 20, 2006
- SPY – 54.8 (neutral)
- IWM – 34.1 (neutral)
- QQQQ – 34.8 (neutral)
- DIA – 80.3 (very overbought)
www.crowderinvestments.com
Which way do we go, which way do we go
December 19, 2006
The market seems to be at odds, at least over the short-term. We have not seen the major indices sit in an oversold (IWM) and overbought (DIA) on the same trading day in quite some time. In most cases, the higher-beta sectors win out, but given the string seasonal tendencies that remain until years end I have to think we are going to at least get a test of the recent highs in the IWM and QQQQ. The next 7-10 trading days should be quite interesting. Stay tuned. Have a great night!
RSI Wilder (5) for December 19, 2006
- SPY – 56.3 (neutral)
- DIA – 79.5 (overbought)
- IWM – 28.4 (oversold)
- QQQQ – 40.3 (neutral)
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Kindest regards,
Andrew Crowder
Chief Options Strategist
Crowder Investment Research, LLC
Strong Seasonality Ahead
December 18, 2006
The trading day following options expiration is typically bearish and today was no different. The market moved higher at the open only to falter a half hour into the trading day. The impact of the sell-oof was felt in the higher-beta indices that we follow, the Russell (IWM) and Nasdaq 100 (QQQQ). Both indices are nearing oversold conditions and if they manage to move slightly lower intra-day tomorrow, testing the recent lows, the bulls could step in for a sohrt-term oversold bounce. Couple the potential oversold conditions with strong positive seasonalilty ahead and we could get a move back towards recent highs. This could certainly make for a nice short-term set-up over the next day or so. Historically, the closer the market gets to the holiday the more bullish the seasonal tendencies become, so it will be interesting to see if today or tomorrow morning is indeed the low for the week.
RSI Wilder (5) for December 18, 2006
- SPY – 51.8 (neutral)
- DIA – 77.1 (overbought)
- QQQQ – 45.1 (neutral)
- IWM – 34.7 (neutral)
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
Bullish Holiday Season Followed by January Correction?
December 15, 2006
The market continued the surge higher today although most of the gains were given up as short-term overbought conditions proved too much for the bulls to overcome. The RSI readings are still quite high and a there area few other short-term indicators that are leaning towards the bearish camp. Remember, when I say short-term I mean 1-5 days.
As we move into post-options expiration I would expect to see some weakness on Monday as the day following options expiration is historically weak. After this short-term phenomenon passes the seasonal winds are overwhelmingly bullish and should lift the market higher going into the New Year. However, once the New Year passes I expect to see a decent sell-off. January corrections have been the norm over the last 20 years with 17 out of 20 years suffering sharp declines.
We could see continued upside momentum, forming a short-term peak, during the first few weeks of 2007, but this should taper off quickly as we reach the middle of the January. Typically, a correction has followed and usually sharp and quick, however, given the nice rally we have experienced since the Summer months the sell-off could last a bit longer. The odds are certainly leaning towards this scenario.
RSI Wilder (5) for December 15, 2006
- SPY – 61.1 (neutral)
- DIA – 75.6 (overbought)
- IWM – 56.7 (neutral)
- QQQQ – 66.2 (neutral)
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Kindest regards,
Andrew Crowder
Chief Options Strategist
Crowder Investment Research, LLC
Post-Options Expiration Blues???
December 14, 2006
Will the post-expiration bear rear its ugly head on Monday. Historically, the trading day following options expiration is substantially weaker than normal. Couple this with the S&P (SPY) and DOW (DIA) in a very overbought to overbought state and we could indeed expect to see weakness on Monday.
Another telling sign for short-term weakness on Monday is the struggling high-beta sectors of the Nasdaq 100 (QQQQ) and the Russell (IWM). Both indices have struggled to keep up with the S&P and DOW which usually spells trouble going forward. Overall, I expect to see continued strength, with a overbought selling days mixed in, over the next few weeks. Seasonality is extremely strong during this time of year and should help keep the market afloat. However, as we enter 2007 the market could reverse course and head lower much like we have seen over the last five years. I will go over this intersting statistic in tomorrow’s post. Have a great night!
RSI Wilder (5) for December 14, 2006
- SPY – 82.1 (very overbought)
- DIA – 79.2 (overbought)
- IWM – 59.9 (neutral)
- QQQQ – 64.4 (neutral)
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Kindest regards,
Andrew Crowder
Chief Options Strategist
Crowder Investment Research, LLC
Christmas Correction or Santa Claus Rally?
December 13, 2006
The market gapped up at the recent highs at the open only to give back all of the gains shortly after the opening bell. Today marks the seventh straight day of what has been a very tight trading range in the major indices, particularly the S&P (SPY). I expect to see a breakout of the range within the next three trading sessions. Options expiration is only a few days away so volatility should pick up and we also have a few key economic releases over the next few days which should give the bulls or bears the conviction needed to move the market outside of the current short-term range.
The Dow and S&P are at the high side of neutral territory while the high-beta Nasdaq 100 and Russell are on the low side. If the high-beta indices can move the market lower, preferably to a oversold state I would be willing to look at taking on some long positions with the historically postive seasonality ahead. Seasonality has been rather tricky over the past few months so it pays to be patient in this type of market. Wait for the high-odds set-up. We talk about our preferred set-ups in great length in our newsletter and White Paper. Anyway, have a great night and pay close attention to the areas of support and resistance that I have mentioned over the past week.
RSI Wilder (5) for December 13, 2006
- SPY – 66.5 (neutral)
- DIA – 64.1 (neutral)
- IWM – 49.4 (neutral)
- QQQQ – 45.7 (neutral)
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Kindest regards,
Andrew Crowder
Chief Investment Strategist
Crowder Investment Research, LLC
S&P Continues to Bounce Off Strong Support
December 12, 2006
Before I get started with the good stuff I would like to apologize for the late post. This the first, maybe second time that I have had ISP issues and hopefully it will be the last. I know many of you look forward to reading my daily post so again I apologize.
The move today before the Fed announcement is somewhat of a rarity. Typically, the market will trade in a tight sideways fashion with volume tapering off as the day moves closer to the Fed announcement. Obviously, this did not occur today which caught a few surprise, howver, it for the most part a no harm no foul type of move because the S&P bounced off of what has been a very strong level of support at 141.
The market is just finished its sixth day trading a tight range-bound environment. As I stated yesterday, in most cases, the longer we remain trading in this tight sideways mode the sharper the move outside the range. Also, Fed announcement days sometimes give a false breakout and while we did not get the typical breakout the market did bounce substantially off the 141 level. The day after the announcement is where we usually see volatility move back into the market. Couple this with the upcoming options and the seasonally bearish Monday folloiwing options expiration and I think we could be in for a wild ride over the next three trading sessions.
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Kindest regards,
Andrew Crowder
Chief Options Strategist
Crowder Investment Research, LLC
RSI Wilder (5) for December 12, 2006
- SPY – 63.6 (neutral)
- DIA – 59.9 (neutral)
- IWM – 45.9 (neutral)
- QQQQ – 41.7 (neutral)
Range-bound Trading Persists
December 11, 2006
Did you notice the VIX today? The investors fear gauge moved lower approximately 11% today. The premier benchmark for of U.S. stock market volatility is back down near historical levels. This is a good indicator that investors/traders are getting complacent and and the probability of a move lower could occur over the short-term. The major benchmarks are inching their way back towards an overbought state (though not quite there) so I will be paying close attention to how the VIX reacts to what I think will be a sharp move outside of the tight range we have been trading in over the last five days.
I am currently following the S&P, more specifically SPY. If the benchmark ETF can hold support at 141 (or around there) we could be in for another leg up or at least a test of the recent highs. If SPY moves below 141 or moves upwards and fails to break recent highs I might be inclined to consider a trade. I would prefer to see the latter as this would move SPY into a short-term overbought sitiation while moving the VIX lower to most likely test recent lows. This could be a good situation for a high probability set-up.
Stay tuned for how this scenario plays out!
RSI Wilder (5) for December 11, 2006
- SPY – 67.1 (neutral)
- DIA – 65.7 (neutral)
- IWM – 60.5 (neutral)
- QQQQ – 51.6 (neutral)
Andrew Crowder, Chief Investment Strategist, www.crowderinvestments.com
