INDEX UPDATE
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We are all aware of the huge momentum in this market. The main purpose of this note is to think-out the best window of opportunity to get back into the market on the long side with calls.
Per my short-term technicals the overall market is just slightly in the overbought region so there is still upside room, but technically there is much greater downside room. The bias for today is mixed, but leaning more towards the the downside slightly.
Statistically, when a market turns it normally moves in that direction more than one day, even in very strong markets as we saw last summer. It does not mean that the price necessarily has to continue down, but normally does. It just means that it normally does not reverse in the opposite direction immediately and should stay at least flat a bit longer.
Unless today is a strong down day for the whole market, DOW-SPX-NAZ, I will wait till next week to get in.
I interpret yesterday as a mixed day, with the DOW and the NAZ moving in opposite directions with about equal strength, and the SPX somewhere in between, slightly to the downside. Although I noticed that the strength in the NAZ was not broad but mainly limited to the bigger players.
On the subjective side - there is alot happening in the news-front this weekend with the UN going to IRAQ, the economic meetings in EUROPE, etc so as a basic rule of thumb I try to avoid situations with substantial news which could effect the market. Just not that good at guessing the impact of news on the market.
As of this time, based on technical and statistical probability
the better time to get back into the market is next WED, THU, FRI. Yes, the market could run up hard today, MON, TUE but the probability of that happening is not high.
Also considering time-value deterioation, next week would be the better timing.
Please keep in mind that I am focusing on option plays which requires much better timing than playing stocks.
The futures were down slightly earlier and now up .50, therefore feel there is no strong indication of market direction from the futures so far.
Seeya |
