Thursday, April 3, 2008
Equity Market Comment - 4/3/2008
A rather directionless day today in quite a tight range.
It really was not even a good day for daytrading as the moves were very hard to gague and the consolidations were very unpredictable.
I did get a signal to buy Put options for the 3 day cycle account and that was done at the close today. I purchased the April 138 puts at 2.80.
Take a look also at the hourly chart below and you can see that the odds are really starting to favor a pullback of some sorts.
Really no change in my equity market opinion as we continue to wait in order to increase our exposure to stocks.
It really was not even a good day for daytrading as the moves were very hard to gague and the consolidations were very unpredictable.
I did get a signal to buy Put options for the 3 day cycle account and that was done at the close today. I purchased the April 138 puts at 2.80.
Take a look also at the hourly chart below and you can see that the odds are really starting to favor a pullback of some sorts.
Really no change in my equity market opinion as we continue to wait in order to increase our exposure to stocks.
Wednesday, April 2, 2008
Broker Dealers Look Like They Are On The Verge of A Monster Rally
Below is the predictive price model of the Broker Dealer index and as you can see by the black bars, the model is calling for a very hefty move higher over the next 3 months.
It is no secret that these stocks have been beaten to a bloody pulp and some of them to levels that simply were not justified. Well the market has ways of fixing these pricing discrepancies and in this case it should be higher prices.
I am trading this with call options and not the actual stock.
I am buying Merrill Lynch call options as it seems to have the best odds of performance.
I am looking at the July 45 calls, which are trading at 6.70 right now. Therefore it will cost you $670 to control 100 shares of the stock as opposed to $4500 to buy the stock outright.
I will be purchasing 10 contracts in order to control 1000 shares and based upon my fill price I will be placing a protective stop order at 25% under my execution.
With the 3 day cycle starting to roll over I may wait until a small corrective move takes place, but I will keep you informed.
It is no secret that these stocks have been beaten to a bloody pulp and some of them to levels that simply were not justified. Well the market has ways of fixing these pricing discrepancies and in this case it should be higher prices.
I am trading this with call options and not the actual stock.
I am buying Merrill Lynch call options as it seems to have the best odds of performance.
I am looking at the July 45 calls, which are trading at 6.70 right now. Therefore it will cost you $670 to control 100 shares of the stock as opposed to $4500 to buy the stock outright.
I will be purchasing 10 contracts in order to control 1000 shares and based upon my fill price I will be placing a protective stop order at 25% under my execution.
With the 3 day cycle starting to roll over I may wait until a small corrective move takes place, but I will keep you informed.
Equity Market Comment - 4/2/2008
The lack of follow through today, while not exactly what I wanted to see, still was not a huge negative. This is because there really was not much downward pressure today and actually as I watched the futures trade today there was some fairly aggressive accumulation going on.
Now the chart pattern that we currently have is a crossroads pattern, in other words, the market could go one way or the other from here. I am favoring a small continuation of the rally for a couple of reasons.
First, the major momentum models actually ticked up today and kept the upside inertia in tact.
Secondly, Thursday is very typically a decent day for higher stock prices and even more so when Wednesday is a down day.
Remain with the conservative 60% allocation and for those of you who are trading the 3 day cycle with me, we can look for a place to buy in the money SPY puts tomorrow if we see higher stock prices.
Now the chart pattern that we currently have is a crossroads pattern, in other words, the market could go one way or the other from here. I am favoring a small continuation of the rally for a couple of reasons.
First, the major momentum models actually ticked up today and kept the upside inertia in tact.
Secondly, Thursday is very typically a decent day for higher stock prices and even more so when Wednesday is a down day.
Remain with the conservative 60% allocation and for those of you who are trading the 3 day cycle with me, we can look for a place to buy in the money SPY puts tomorrow if we see higher stock prices.
Tuesday, April 1, 2008
Equity Market Comment - 4/1/2008
All you really can say about the price action today is WOW!
I had anticipated a counter trend rally, but I would be amiss if I was to say that I expected a move of such magnitude.
However, I wish I could say the same thing about the volume.
We remain in a period of slow volume and this, while not an all out negative factor is also
not one that we can chalk up into the plus column.
The pattern we have been getting into lately is finally what the norm is when the market is in a healthy phase and that is follow through in prices the next day after a move like this. We had this pattern over the last short term rally we had and if we can muster this same type of market action tomorrow then it will be a very optimistic sign for the intermediate term.
We have strong resistance on the S&P 500 at the following levels:
1379
1416/1415
1454
1482
1507
From here we need to see how the market behaves with the potential follow through and should we get this follow through then we can expect a consolidation of 1-2% over the next 3-5 days.
I had anticipated a counter trend rally, but I would be amiss if I was to say that I expected a move of such magnitude.
However, I wish I could say the same thing about the volume.
We remain in a period of slow volume and this, while not an all out negative factor is also
not one that we can chalk up into the plus column.
The pattern we have been getting into lately is finally what the norm is when the market is in a healthy phase and that is follow through in prices the next day after a move like this. We had this pattern over the last short term rally we had and if we can muster this same type of market action tomorrow then it will be a very optimistic sign for the intermediate term.
We have strong resistance on the S&P 500 at the following levels:
1379
1416/1415
1454
1482
1507
From here we need to see how the market behaves with the potential follow through and should we get this follow through then we can expect a consolidation of 1-2% over the next 3-5 days.
Remain 60% invested in stocks and after the next pullback we will assess if our allocation is going to increase or not.
Monday, March 31, 2008
Equity Market Comment - 3/31/2008 - End Of The Quarter
The ultra short term counter trend rally seems to be right on time as the market moved modestly higher today on once again diminished activity.
The movement today may have taken care of 2 out of the possible three legs of the move higher.
Therefore I will be looking for one more push higher somewhere in the area of 1336 to 1341.
From these levels I anticipate the final leg of the corrective phase and a return to the rally phase that quite possible could test the old S&P 500 highs in the Mid to Upper 1500's.
Currently I remain with a very cautious 60% allocation to equities and will begin to increase that exposure upwards should the market follow a general outline of health.
I did get a 3 Day Cycle Buy Signal today, but being this far into the cycle simply does not justify the risk when measured against the reward. This account remains flat and awaits the next Sell Signal which could come as soon as Tuesday.
The movement today may have taken care of 2 out of the possible three legs of the move higher.
Therefore I will be looking for one more push higher somewhere in the area of 1336 to 1341.
From these levels I anticipate the final leg of the corrective phase and a return to the rally phase that quite possible could test the old S&P 500 highs in the Mid to Upper 1500's.
Currently I remain with a very cautious 60% allocation to equities and will begin to increase that exposure upwards should the market follow a general outline of health.
I did get a 3 Day Cycle Buy Signal today, but being this far into the cycle simply does not justify the risk when measured against the reward. This account remains flat and awaits the next Sell Signal which could come as soon as Tuesday.
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