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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: MrBluff who wrote (35373)	2/23/1998 8:51:00 AM
From: donald sew	Read Replies (1) \| Respond to of 58727

INDEX UPDATE ---------------------------------- It is obvious the that market is technically overbought, and with the news from IRAQ and this upbeat market it will get more overbought, at least for today's open. Now the question, when will the markett settle down or pullback some for some option plays on the long side. Without some sort of pullback it would be risky to get calls right now in light of the increased premiums and time value. As per one of my more recent posts, I will be looking for opportunities in specific sectors or stocks rather than expect too much of an opportunity in the broad market indexes. The immediate question is will there be a pause or are we taking off right now to above the 8500 range (8700-9000). With the way the futures are going is appears that we will be approaching the 8500 level this morning. Here are some of the technical signals I will be watching to help determine that: 1) on just price, do we close near the highs or substantially lower than the highs. I dont mean negative, but if we are up 75+ points intraday and close only positive 25-30, for example. This would be a sign of weakness. 2) If every index is up strong and not one is weak, this is actually a technical sign of reversing. I know, few will believe that. It is a better sign that most of the indexes are up nicely but a few weak, that is a better sign of strength. 3) Watching the smaller NAZ sectors/RUT/2nd-4th tier sectors/stocks to see if this upswing broadens out. On Friday, it did not broaden with any substance. If it broadens then that is a sign of strength. For the last few days the upswings were mainly in the big stocks - it needs to broaden out to confirm such strength. 5) Volume - do we move up in low volume or low volume. Low volume upswings are leading signals of weakness. Keep in mind, that I am not calling for a big pullback for the overall market, but looking for an opportunity in certain sectors. The price of CRUDE dropped alot this morning. If that pulls down the OILS/Oil Drillers, this may be an opportunity. The oils is the largest part of the DOW 30, since there are 3 components of the XOI in the DOW (10%). Can the DOW hit the 8800-9000 without the oils? The immediate opportunity which was also effected by the price of CRUDE is the XAL(airlines). I may go on the call side on one of the Airlines today. Happy trading.