We have a change in trend date coming up March 3-4th and previous to last Thursday and Fridays market action I had anticipated it being a high coming in, but due to the small bloodbath we saw over the last 2 days of the week it more than likely will be a low.
In all probability the low may have occured on Friday as it looks like a downside washout and some strong panic selling. This selling however did not come from the institutional side, it came from the retail side which continues to enforce the premise that the small investor remains very very nervous as they wait for what they believe will be another collapse in stock prices. We can see this activity very clearly in the Put/Call ratios which are showing very prolific signs of wide spread disparity in market players as each rally attempt seems to be met by a wave of selling.
This type of action is quite common when the market is in the process of putting in a bottom of impotance and it is exactly what we are currently seeing in the market.
The market remains in a very strong period over the next 6 weeks, with this coming week being the strongest of the six. This is partially the reason I see Friday as a capitulation day as retail investors flooded out the exit gates in droves.
Considering all the evidence, I see no reason at all to change my outlook and I continue to look for good stocks to purchase and also having lightened up on our call options over last week, it will again be time to buy more on the call side.
Ideally what I would like to see, is a continuation of the decline on Friday early in the trading day on Monday. It will be at that point that I will begin an aggressive campaign of purchasing SPY, DIA and OEX call options for a position trade that should last 2-3 weeks.