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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (64021)	12/9/2000 11:42:20 AM
From: Les H	Read Replies (1) \| Respond to of 99985

General Electric Options schaeffersresearch.com Computer Index schaeffersresearch.com Option Strategist We are still awaiting buy signals from our major sentiment indicators. At first glance, Tuesday's big rally seemed like it was setting the stage for major upside fireworks. However, in the two ensuing days, that rally is looking more and more like an oversold rally and nothing more. In bear markets (which it does appear that we are presently in), rallies are ferocious but short-lived. A more positive view is that the market is now waiting for Friday's news, which is sure to be action- packed what with the unemployment report, possible Florida Supreme Court verdicts, and the reaction to Intel's earnings warning. That is why we use technical analysis, though, because we don't have to guess at what is being said the indicators are rather clear. At the current time, the equity-only put-call ratios remain on sell signals. That includes both the weighted and the normal ratios, as well as the NYSE and NASD ratios, as well as the $OEX weighted ratio and the S&P 500 futures ratios. Of these ratios, both the equity-only ratios, the NASD ratio, and the S&P 500 weighted ratio are all very oversold. We would expect a good rally to materialize when they roll over to buy signals. In fact, we don't even expect to catch the exact bottom because these are 21-day moving averages, but they do respond quickly enough. By the time they turn to buy signals, we would expect to be able to capture a large portion of the intermediate-term rally that should unfold at that time. Meanwhile, we won't be sucked in by one- or two-oversold rallies. Meanwhile the oscillator stands at about +40. It never did get oversold, which seems to indicate that a lot of smaller stocks have been rising while the big-cap stocks have been taking a pounding in recent days and weeks. That's also why the "pre-January" effect did not occur this year. So, only the big-cap stocks are really oversold especially the NASDAQ ones but that's what most people are trading (and suffering with). It is their sentiment that we are apparently seeing in the oversold readings of the put-call ratios.