flurry of activity on this thread.. [[ mkt direction post]]
i've followed donald sew around and he's a great guy on TA and on the mkt.. Got to take care of some errands, but i'll be back to reply..
Subject: Tech Stock Options
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To: donald sew (33487 )
From: donald sew Sunday, Jan 18 1998 9:43AM EST
Reply # of 33496
INDEX UPDATE
------------------------------
As I indicated recently the overall market is basicly overbought, and some indexes have already signaled SELL signs.
Here's the interesting point. As I have said in the past, a main key that I look for concerning longer-term direction is whether the highs are higher and the lows are higher, and vice versa. The following is a list of the major indexes with their previous peaks.
+++++++++++ PREVIOUS PEAK +++++++ CURRENT PRICE
------------------------------------------------
DOW 30 ++++++++ 7980 ++++++++++++++++ 7753
NAZ COMP ++++++ 1594 ++++++++++++++++ 1563
SPX ++++++++++++ 977 +++++++++++++++++ 961
Per my technicals, the overall market just entered the overbought region, this is not to say that it cannot still move up while in the overbought region, and if this was a nice up market it could still move up alot while in the overbought region. But since this is not an up-market for the current cycle, I strongly feel that further upside will be limited.
Now the question is whether the above indexes will be able to at least equal the previous highs for this immediate cycle, and unfortunately I do not think so. If the market overall is unable to at least equal its previous peak as mentioned above, then the probability has increased that we may go lower.
If the market starts pulling back without equaling the previous peak, then the next key to watch out for is whether we go lower than the immediate previous low. If such does not hold - watch out. At that point I will immediately revised my trading range downwards again with the DOW's bottom at either 7200 or 7000.
Without considering fundamentals/fair-to-good earnings so far, technically the market is heading lower - too many negative signals are popping up in my calculations. So to offset my technicals, we need the fundamental/news to over-ride the longer-term direction of the technicals. Fundamentals/news over-ride technicals.
I initiated XAL FEB 690 PUTS when the XAL was at 688 for $20. The XAL is one of the strongest indexes and has just set new highs on Friday.
Per my technicals it is a CLASS 2 BUY, not CLASS 1 as I previously indicated, so it can go higher before turning. Hey, I normally get in a day early - just my luck, ggggggg. Technically, it should be able to pull-back near its 20 day moving average which is around 960, even its 10 day MA is around 965. Subjectively, if oil prices rise soon, and it appears that they have bottomed, such could help pull the XAL down.
Other PUT candidates are the BKX and a broad base HiTech index like the NDX or MSH. Any ideas for INDEX PUT candidates.
Seeya |
