Subject: INTC-BOUNCE
From: JACK RAINS (WYQP23E)
Time: 12/23 12:17 AM
Bill and All: The technicals are terrible at the present time
in the markets. The Dow essentially made a double top on
Friday as it went way up and couldn't hold it. Eventually,
it closed back to where it was only around 10 points up for
the day - quite a difference from the intraday high of 6599
plus to close back in the 6400 plus area. If you look at the
Dow, S&P, and Nasdaq charts in the IBD newspaper available
to everybody on here, you will see that the advance/decline
lines are trending lower all the time. In addition, the
Mutual Fund Index is at its low for the year concerning its
relative strength to the S&P500. The Dow not only
essentially has a double top put in Friday, but the S&P >>
has shown a reluctance to break above its declining
trendline across its minor tops. And, then there's the
Nasdaq, which has a chart pattern that looks like a bearish
head and shoulders formation forming. I could go on and on.
Not the least which is that when you have reversals intraday
with the indexes coming back to essentially close on their
lows or near them, the percentages dictate at least a
decline early. And, from there - I'll just have to wait and
see what happens. One thing for sure, it can't be said that
we are going higher as long as those previous highs are
holding up and not being broken. When and if they are, then
we can say that the trend is once again up - for sure. >>
Hence, my early move into the index put options on Friday as
the Dow soared well up in total points initially, only to
fall back. To get bullish, we need the Dow to go to a new
closing price high (around 6547) at minimum.
As for Intel, what it will do on Monday should be well known
after the first half hour or so of trading. There are cross
currents with it - there being some favorable items out on
it, but on the other hand, some items relating to other tech
stocks which could affect all. Again, I say watch for the
gaps and any fakeouts. Good trading. Jack
Also, concerning the gaps, up or down, when Intel closes them and goes beyond the closing price of the day before by 2 ticks (1/4 point) on the ASKED price, then it is time to sell or time to buy depending on which direction Intel was going when it closed that gap. Again, it's not perfect - but others on Money Talk BB of which some are on here also will attest to the fact that it has worked the majority of time thus far. The supports for Intel at present are at 133 and 130 with others below that. I still maintain that the 137 plus area offers some resistance with Intel's high at 141 1/2 being the ultimate resistance area.
Jules; Yes, I remember about that cross hedging incident - and I still don't believe in it. But, remember you were using one equity to hedge another one. In my case, I'm using put options to hedge one equity position - incidentally on an 8 to 1 ratio at present. I don't like some of the things I'm seeing here, but then again I'm well aware of the normally bullish period during Christmas and early in the new year. Hence, I'm into a position at present which requires the markets to prove to me which way they are going to go - and I have enough room on my costs to wait and see. Good trading. Jack |
