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

To: Electric who wrote (35751)	3/1/1998 8:15:00 AM
From: donald sew	Read Replies (1) \| Respond to of 58727

INDEX UPDATE ------------------------------- Most of the indexes have set new highs, therefore it is obvious that the bull trend is still intact. I mention that since the discussion now is where is the INTERIM (short-term) top. After the next pullback the technicals are still saying that the market will continue back up to at least test the highs and could set even higher highs. Since this thread concentrates on options, the nature of it is the short term, and for me - I try to go after as many ripples as possible. Many are now saying that we should start pulling back within 3 weeks, and as of right now I am targeting MAR 11-13 to start a decline. As for the size of the decline, it will be in the 200-400 DOW point range, which is relatively small and this is not to say we are at the beginning of a bear market, just a technical correction which is healthy for the market to continue up. There are many technical signals that the market will top out for the short-term soon: 1) ADVANCE/DECLINE RATIO slowing down 2) NEW HIGH/NEW LOW RATIO slowing down 3) INCREASING NUMEBER OF DIVERGENCES - this is actually a good signal also, in that it means that the market is getting more broad based for the longer term to continue further up, but for the shorter term is can be interpreted as a short-term topping off process. 4) Strong divergences from the MOVING AVERAGES 5) Over the last week the movement upwards were mainly in the big names, so for the short-term the movement up was not that broadbased. Prior to last week the upswing was more broad based. 6) Volume is slowing down slightly. On Friday we saw the DOW up nicely, but the NAZ was negative. During the past few weeks the way this market handled such divergence was that the next the day the laggard caught up, and it was a buy on any-dip mentality. Obviously this cannot continue since, hypothetically it would mean that we the market is heading to infinity. If the NAZ does not rebound immediately on MONDAY, even if it rebounds on Tuesday, it would be a small confirmation that we are topping out for the short-term. I have been working on a new indicator dealing with the NEW HIGH/NEW LOWs. If the ratio on the NYSE of NEW HIGHS to NEW LOWS is less than 9.5 on Monday it would be a confirmation signal that the small pullback could start in 4-9 days, regardless if the the market is up. This is a new indicator that I am working on and is still in test stages. And please keep in mind that such is not by itself, it is just one key, and not conclusive. As for next week, I expect some slight movement up (maximum 100 DOW points at least intraday-(8650 range)) but overall flatness. My strategy will be to start initiating puts if/when the DOW surpasses 8600 intraday. I will not be doing it all at once, just in case. Here are some relatively weaker indexes on a technical basis: SOX DDX XAL TRX Here are some of the indexes which are most overbought, technically: DOW NDX SPX IIX XCI BKX XBD YTK Seeya all RLX