Tuesday, March 25, 2008

Equity Market Comment - 3/25/2008

Today could have been nothing more than a consolidation day after some very impressive gains in the market over the last few sessions.

However, with the declining volume as the market has moved sharply higher, coupled with the inside day and an up close, we are starting to get signals of a tired rally and a possible short term decline.

You will notice also that the 3 day cycle mode for option players went flat today from being long calls. We had a very nice double in the call options, but did not want to wear out our welcome and give any of that back. The model did not give a signal to enter puts just yet, but is very close to giving such a signal.

If we are to be greeted by some type of decline here, it is going to tell us quite a bit about the health of this market and whether or not we can label the most recent low as an intermediate term low. Right now all systems remain on green for this past low being a very trade able bottom and until I get a signal otherwise I will be moving the equity allocation up as the market retreats.

Right now, stay with the 50-60% allocation, but prepare your stock, ETF or LEAP option picks for a potential secondary low.

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