Tuesday, May 13, 2008

EQUITY MARKET COMMENT - 5/13/08

The call buying continues as a furious pace as the small investors continue to get on board what they see as "The New Bull Market". As I mentioned yesterday, this process continues to send a negative message about the underlying health of equity prices and you need to adjust your portfolio accordingly.


It seems as though everyday we are given yet another piece of evidence as to the true underlying trend of the market. Take a look at the Hourly chart below and you will see a market that currently teeters on the brink of what may perhaps be a very steep correction, if not a steep new leg lower in a bear market.

Nothing new here.
Just the same message to remain very defensive in your equity exposure.
Remember also that if the daily stochastics on the S&P 500 cash turn down in the next day or two that it should be an excellent opportunity to get on board with put options.


The market today did not really follow the pattern my work has indicated, but obviously it is the work that is incorrect and NOT the market, the market is ALWAYS right!
Even though the seasonal prediction got a bit off track today it still does not change the current bearish outlook for stock prices. With this in mind, Aggressive Short Term Option traders can continue to look at entering SPY put options. As of early today, all of your call options should have been sold and if you did not have the opportunity to purchase puts we will have another opportunity tomorrow. I will post the specifics for short term traders later this evening.

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