INDEX UPDATE
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My short-term technicals are all severely overbought and have been that way for some time. As previously indicated I am expecting a top today or TUE, and weakness to follow. I also indicated that there should be a 5% pullback as long as the NEW HIGHS stay below 100, and I think this may be the key.
On Friday the NEW HIGHs got to the 80 range, which is getting close; therefore it needs to be watched carefully. Also the European markets are up strong, and may be in the process of breaking above their previous peaks.
I still believe we are near a short-term top, but in terms of the price of the DOW - where is that. Previously, I mentioned 9100-9200 and its still in that range. However, I am suspecting that we could see another spurt upwards of as much as 200 points in the DOW, taking the DOW to the 9300-9400 range. On FRI, the DOW was up 100+ points, but the highest the TICK got was 400 range. That implies that there are alot of smaller investors buying still, but the BIG BOYs were not participating since there were no huge buy programs. If the smaller players continue to buy and the big boys step in, we could see a strong upsurge today. Im not saying it will or it wont, but express caution for those trying to establish PUTs today.
I am still not interpreting this rally as being so strong, since many indexes (RUT,SOX,XAL,TRAN,BKX,XBD,CYC,FPP) have only rebounded about 50% or less, and they could be interpreted as still being in a BEAR MARKET rally, if they do not continue to move up.
My strategy is to start initiating PUTs on some stocks, which are showing a topping out process, if we get close to 9300. I will wait for a clearer signal to initiate OEX PUTs.
We are close to a short-term top in reference to time, but that doesnt mean that the market cannot make a surge upwards. Please keep in mind that strong price moves to the upside can still and commonly occur in the overbought region.
Seeya |
