MAR 17 INDEX UPDATE
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Short-term technical readings:
DOW - CLASS 1 BUY(daily), CLASS 2 BUY(weekly)
SPX - CLASS 1 BUY(daily), CLASS 1 BUY(weekly), CLASS 2 BUY(monthly)
OEX - CLASS 1 BUY(daily), CLASS 1 BUY(weekly), BORDERLINE CLASS 1 BUY(monthly)
NAZ - CLASS 2/BORDERLINE CLASS 1 BUY(daily), CLASS 1 BUY WEEKLY, CLASS 1 BUY(monthly)
NDX - CLASS 2/BORDERLINE CLASS 1 BUY(daily), CLASS 1 BUY WEEKLY, CLASS 1 BUY(monthly)
RUT - CLASS 1 BUY(daily), CLASS 2 BUY(weekly)
BTK - CLASS 2 BUY(daily), BORDERLINE CLASS 1 BUY(weekly)
SOX - CLASS 2 BUY(daily), OVERSOLD(weekly)
PUT:CALL - 1.08
5 DAY TRIN - 9.67
VIX - 35.29, oversold region(inverse to market)
VXN - 76.23, oversold region(inverse to market)
Per my short-term and weekly technicals, everything is lining up for a rally to start this coming week. Basicly, my technicals are in the most oversold status since I have been watching it since 1996. Additionally, if we get one more down day on MON which closes at its low, mathematically my technicals for the overall market would be at the lowest level, and if the market continues down further it would be a WIDESPREAD TECHNICAL BREAKDOWN/NEGATED CLASS 1 SIGNAL. Simply put, if some sort of rally doesnt start by latest TUE, even just a 1-2 day thingy - this market is in really big trouble, implying that the BOTTOM could be ALOT lower.
Basicly, almost everything is lining up for some sort of a rally, even just a 1-2 day affair, to start either MON/TUE.
For this discussion, lets assume a rally does start MON/TUE - the question then is how high will the market go and how long will it last. Since I also have CLASS 1 BUYs on the WEEKLY it is implying that this forthcoming rally should have some substance and should not be a 1-2 day thingy. AM I GOING TO IGNORE THE RECENT HUGE MARKET NEGATIVITY -THATS an EMPHATIC NO!! In other words Im not going to ignore the possiblity that my technicals may fail this time and that this rally turns out to be only a 1-2 thingy or no rally(based on daily and weekly siganls).
For discussion, assuming that FRI was some sort of a low/bottom, here as the FIBONACCI rebound levels for the NDX from the FEB peak of 2772 to FRI's lows of 1628:
38% - 2063
50% - 2200
62% - 2337
If Friday's lows was at least a mid-term bottom, then a rebound to the 2000 region is quite possible. I didnt say the NDX can't go lower first.
As mentioned previously, the next support I have on the NDX is in the 1500-1400 region, which equates to approximately 1750-1650 on the NAZ. NDX 1500-1400 was the peak trading range back in 1998 prior to the strong selloff into OCT 1998 where the NDX got as low as 1063.
Heres my swing trading strategy that I will now follow:
1) sell long positions/short every CLASS 1 SELL signal/rally in fair amounts
2) buy long positions/ close short positions on every CLASS 1 BUY signal in smaller amounts
3) start hedging my long positions when my short-term technicals get into the mid/upper-mid range, in case I dont get CLASS 1 SELL signals.
This is a defensive strategy, since I will be selling more than buying, keeping in mind that Im also trying to play the ripples. Also, I feel strongly that there will not be a "V-SHAPE" recovery, but feel that once the bottom is set, wherever that is, the overall market will be in a trading range for months, and possibly alot longer. If I am correct about an extended trading range, I feel comfortable with swing trading in both directions as a viable strategy. Of course once the bottom is set, a BUY-HOLD strategy will also work if one has a longer/long-term time horizon, which may become in terms of years not just months. Am I sure about that - NO, but I wont ignore that possibility.
So Im suspecting that the big jumps in stock prices which we all were accustommed to over the last 2 years, will continue to fade. Some stocks will still jump strongly, but there will be alot fewer of them. Keep in mind just back in 1999, probaly over 1000 NAZ stocks were moving up strongly, where one could just throw money at stocks and ,on paper, the accounts appreciated dramatically. Where 1000's of stocks were moving up strongly back in 1999, it may now just be a handful. Those days are over, until the next mania. |
