Saturday, March 1, 2008

Weekend Equity Comment-3/1/08

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.

Thursday, February 28, 2008

Equity Market Comment 2/28/08

It is do or die time for the market on a short term basis and there are some very mixed signals.

The seasonal model dictates Friday as a strongly trending up day and the Wedge that we broke out of is being tested both on a closing and intra day basis.

If this test can hold the line then we could see some sharply higher prices in a very short period of time.

On the other hand we have a potential change in trend coming into play on March 3-4th and a stochastics turn down today.

So we have a little of both bullish and bearish implications and this should work its way out on Friday and tell us where equities will be headed over the next 3-6 trading days. As a cautionary measure, we took about 1/3 of the aggressive long and call option positions off the table today just in case we have seen the high for this leg up.

Wednesday, February 27, 2008

Equity Market Comment - 2/27/08

The seasonal model just about pegged the action today with the exception of a very small down day instead of a very small up day.

Everything remains just about in line with the current scenario I outlined yesterday and this would look for higher prices over the next two days and a short term high put into place Monday.

The final target for this high using the S&P 500 cash index is 1412 or about 35 more S&P points from here. This would imply that the next two and one half days should be quite strong and the seasonal model confirms just this scenario.

Short term traders should use the next 2 days to scale back their long positions including call options. There are some very handsome profits out there and it would be prudent to begin taking those profits.

Intermediate term traders can look as the potential pullback as an opportunity to add positions to their equity holdings as the next move after the correction has run its course should be a good one.

Tuesday, February 26, 2008

Change In Trend Date Correction

In todays equity comment, I stated March 4th as the change in trend date.
The correction is that the Change In Trend date will be Late March 3rd or early March 4th.
This time frame could also be off by one day, so we will call it Late of March 3rd to Early March 5th.

Gander Mountain - Protect Profit

Gander Mountain has made an impressive move from the breakout level, just a little over 25%.

We are currently nearing the $7 minimum target level and thus we want to put a stop in place to protect the profits.

A sell stop of $6.50 on a closing basis should do the trick. This will lock in a 20% return should the stock turn lower, but it is also far enough away to keep the position in place and capitalize on still higher prices.

I do anticipate higher prices for GMTN as $7 is merely the minimum target, however, it never hurts to lock in a substantial profit when one is put on the table.

Equity Market Comment 2/26/08

Today market made the breakout day on the closing basis for the wedge pattern.
If we can get some follow through on this break and send confirmation then we have some excellent upside targets.

More than likely the market will continue its uptrend as we saw some fairly decent put buying action while the market continued higher. We also are coming into the strongest day of the week with Wednesday and also the 2nd best day on the end of the month pattern.

If the S&P 500 can manage to take out todays highs at 1387.34 then the odds of an up day shoot through the roof to 81% and an average .73% return which translates into about 10.5 S&P 500 points.

While we do remain in a bullish phase both on a technical and seasonal level we do have a change in trend date late in the day on March 4th or early trading of March 5th. I anticipate this will be nothing more than a normal pullback, but dependant upon how far the market continues to rally here it could scare a few people, which is just what we need. I will address this scenario as we draw closer to the date.

Wedge on the High, Low and Close chart had its breakout yesterday.

The follow through of today made the closing chart breakout as well.

The Phase Model currently shows some modest bullishness with the following ratings:
3 Bullish
2 Bearish
1 Neutral

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