INDEX UPDATE
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INDU, OEX, SPX, BKX, DRG, XMI
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Short-term technicals show overbought, with the MIDDLE DOJI. The Bias should be to the downside or at least flat for today. Any pull-back in the neaar term should not be substantial, as I will explain further.
SOX
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CLASS 1 BUY, but as I indicated in my earlier note, the SOX is showing substantial weakness with lower lows and lower highs; so if one plays it go for the quick pop and be nimble. Support area in the 271-278 range and that would also be a good target price for the CLASS 1 BUY. I am not saying that it will get there, but if it does get there today it will intensify the CLASS 1 BUY.
DDX
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CLASS 2 BUY - could go slightly lower with 218 as target price
XOI
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Indicated yesterday that it was a CLASS 1 BUY for yesterday, and still holds. The XOI is a much slower mover than the HiTechs, and I would state this short-term up cycle would end in 5-10 days, if it happens.
This index is reliable technically.
OSX
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Indicated yesterday that it was a CLASS 1 BUY for yesterday. The OSX was the strongest index of all the 30 which I follow. In fact it was the strongest by far moving up more than 4%, while most all the others were either flat or negative. For those who followed it, I purchased the JAN 100's for 14.5. This is not a fast mover, and the OSX is only a 100 point index compared to the majority which are closer to the 500 point range or higher. I played the Jan's since the time value is small, and since I want to hold on to these as long as possible playing option spreads as it moves up. My strategy will be to sell calls on them as it rises and as the technicals approach overbought and then buy them back as it pulls-back. With about 7 weeks left, it may be possible for me to do it more than once. As for today, the probability is for flatness or at the most slightly up for the OSX.
GUITAR ANALYSIS
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The divergence between the Non-HiTechs and the HiTechs are near maximum levels (quantifiable per the guitar). As I indicated in a previous post several days ago, there are 3 possibilities:
1) HiTechs to pull Non-HiTechs down
2) Non-HiTechs to pull Hi-Techs up
3) Hi-Techs to move up and the NOn-HiTechs to move down to narrow gap
I am still more inclined to stay with points 2) and 3)
Granted, I simplified the market into 2 general sectors, and that is not totally correct, but for the purpose of simplicity so I do not have to explain every GUITAR calculations, since there are approximately 25 of them.
The market is healthy and is in an uptrend for the longer term. I based that comment on mainly technical signs, but there is some subjectivity to that.
Happy trading all.
Donald |
