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 previous posts lately: the VIX (historically low), major indices are back in a very overbought state, and a few others I have mentioned previously. Also, check out the previous posts regarding the mid-term elections. 

Sorry to keep it so short this evening. I am working diligently on added features for the blog which should start to trickle out over the next few weeks. Have a great night!

RSI Wilder (5) for October 23, 2006

• SPY – 85.5 (very overbought)
• DIA – 85.2 (very overbought)
• IWM – 58.1 (neutral)
• QQQQ – 72.6 (overbought)

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Andrew Crowder, Chief Investment Strategist, Crowder Investment Research, LLC