Markets--P. Cherney, S&P:"Markets Remain Susceptible to a Bad Headline"
personalwealth.com
Edited for ease of reading.
>>>Monday October 09, 2000 (4:26 pm ET)
The Markets Remain Susceptible to a Bad Headline
By Paul Cherney, S&P Market Analyst
NEW YORK, Oct. 09 (Standard & Poor's) - On a short-term basis (next 4 trade days), we are in such an oversold condition that a sideways to higher market should unfold. Whether this can garner the buying power for a protracted move higher is doubtful at this time.
A short-covering rally could be ignited very easily if we saw any one of the three following conditions.
1) Total Put Volume at the CBOE of greater than 923,000 contracts.
On Friday, there were only 737,304 put contracts traded.
On the same day, the Total Put/Call ratio should be greater than 0.85 at the end of the day.
In Monday's session, as of 3:30 pm EDT there had been only 355,000 put contracts traded but this was due to the thin participation as a result of the Columbus Day holiday and the observance of Yom Kippur.
It is almost worthless to try to make any conclusions from volume related measures created during Monday's Market.
2) Big volume reversal, meaning probably a total of 2.2 billion (or higher) shares traded on the NASDAQ.
This would offer a sign that sellers have sold and it could be the buyers' turn.
However, I must caution, even if the items listed in these two bullet points are met, this market is in the process of a major shift in psychology and even short-term capitulations can be followed by 3 to 5 days of rapidly shifting opinions causing prices to be up one day, down the next.
The establishment of new lows for the current down-leg cannot be ruled out regardless of the extremes seen in P/C ratios or volume.
3) An earnings surprise (good earnings) from a prominent company which created a broad rally, forcing shorts to cover.
Immediate NASDAQ resistance is 3361-3384 then 3382-3408, then 3411-3432.
Immediate support is 3327-3291 then 3284-3233.
Immediate S&P 500 support is 1402-1392.
Immediate S&P 500 resistance is 1410-1421.<<< |
