Diana,
Boy oh boy oh boy oh girl. It really is old timers' week in Big Dog's kennel. And what has brought everyone out of the woodwork and out from under various rocks? Volatility, fear and loathing, a unique blend of ego and fear and greed and uncertainty. It's really amazing to see how people want to dictate to the market where a top will be.
Why is it amazing? It's as if the first $10 of a move off the top is worth more than the next $10, or $20, on the way down. If OIH or OSX has really made a top and will come down there will be many many fine opportunities to short/ buy puts once the trend has reversed.
What can we say about the OSX? Well, that is a nasty candle today and probably will be followed by a down candle tomorrow. Or not. What we have with the OSX is, for now, a strong pullback in an uptrend. If you go back to Dec. 6 or so you can see a similar pattern which formed and actually took the OSX below the 20 and 30 emas for about 7 trading sessions.
When folks are getting very very very excited about a top there are a few things you can count on, but first and foremost is that it is unlikely to be the top. But if 4 sessions ago was indeed the top, you can expect to see something in the next few days: first, you'll see the OSX take out the 137 level, and perhaps bounce off 136. If it only rises a little and then turns down strongly, there's a good argument that at least a medium term top is in and prudent punters can look to try to snag some downside profits with selected puts.
What's another explanation for all this volatility based greed and fear? I believe the prospect of $60 oil has a lot to do with it. In fact, didn't we do the $50 oil conniption last November December, when the OSX did an excellent imitation of a perfect head and shoulders breakdown, which never materialized (that is $116 was not a shortable play but rather put-suicide for those who determined they could predict the then-top in the OSX).
In any event, while it is great fun to predict tops and hoot and holler about them, this one has more work to do to go from being a simple pullback to a correction.
Kb |
