Warning: This is in response to Pete's situation and may be quite boring to some!
Pete, Let me emphasize that now is not the right time for me to be responding to your request but because I opened my big mouth, as I am wont to do, in response to your current situation, I will make a few remarks.
First of all DDIM is acting very well technically and any surprises seem to be leaning to the upside. I would prefer to see some additional backing and filling, but we may not. The Maximum downside risk appears to be at 26 where both the rising 50 MA and long term trendline currently cross. Keep in mind that both the 100 MA and 50 MA are now rising so this will be an upward moving support area that we will continue to watch. I can only see this 26 area approached IF AND ONLY IF the DOW collapses in here which is a distinct possibility. I have been posting that I was concerned about the bond market and rising interest rates and this has been the case lately. If we are going to break down hard in here i.e. 200-300 points, it should happen tomorrow or Thursday and quickly rebound. This COULD cause DDIM and most issurs to spike down and in the case of DDIM to touch this 26 level. Do I think this is most likely to happen? NO.
I expect the exact opposite to happen to the market and by Thursday, when the seasonal Labor Day effect takes over, and the market moves perhaps strongly higher. In this preferred senario, DDIM, although still somewhat overbought should participate in the advance. The keys will be the GDP to be released Thursday morning. Anything over a revised 3.5% for the second qtr. and the bond market will tank. Strategy here is to watch the market closely tomorrow and hope ( if you are a BULL) that the S & P averages do not close signifantly below todays close. The market is getting oversold so the odds are in our favor. For you, I would cover my short on any near-term pullback in DDIM. Todays low may have been it. If the market doesn't close lower tomorrow, then I believe that we are on our way to a meaningful relly and possibly a significant one and I would cover my short position before a higher close tomorrow. I am still on covered writes of Sept. 30's and 35's from last week and I will most likely cover these tomorrow if the above senario unfolds. Those are my thoughts and I hope our KARMA is on the right side. |
