INDEX UPDATE
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Technically, the overall market should have come down harder over the last few days. The HiTech overall held up quite nicely as some of the DOW indexes pulled back substantially.
Most of the HiTech indexes are still only in the upper-mid-range and a few still in overbought region per my short-term technicals. On the other hand the XAL, XOI, OSX, CON, BKX, XBD are in the oversold region already with some CLASS 1 & CLASS 2 BUYS. The majority of the other indexes are in the MID-RANGE, where it can go either way, a flip of a coin.
In light of such a huge divergence amongst the various indexes it is now extremely hard to determine direction over the next few days - I guess to will leave that up to the SUPERBOWL >>>ggggggg<<<.
The best guess that I can make is that the next 1-2 days may be flat (flat = DOW plus or minus 30 points) as it was on Friday. The Bias is only slightly to the downside. Overall, I feel that the technicals are in the mid-range to lower-mid-range, and at this juncture the market will be highly influenced by news(earnings, Clinton, Asia, Saddam, etc) to determine direction.
Here are the the CLASS BUYs, but please take caution since the overall market can easily continue down. I will be waiting 1-2 days in hopes that the technicals can be more decisive:
CLASS 2 BUYS = XOI, OSX, XAL
BORDERLINE CLASS 1 BUYS = BKX, XBD
Right now I am in cash, just exited my PUTS on Friday.
One last thought - As long as there is volitility, and since there is no firm direction, and that the technicals are in the mid-range, could this be a good time to initiate a straddle or strangle. I had thoughts on Friday of buying CALLS on the XAL when I still had my PUTS, but since the XAL dumped so much on Friday I just closed my trade. If the XAL would have only dropped 5-10 points instead of 24 points, I most likely would have initated CALLS, and keep my existing PUTS to form a strangle. I strongly feel that the key to doing a strangle/straddle is that there is strong volitility, and the market moves quickly in a firm direction, in order to minimize time value deterioation.
Seeya |
