Tuesday, March 22, 2005


Critical Market Juncture - Can this 2-week cascading market end its downswing soon, or are we destined to proceed from Aw,Shucks to Shock & Awe? Ignoring opposing media Views, as opposed to Actionable News, here's how I would read this market Technically: An extremely oversold market should rally, at least short term covering, at some point during this recent 4+% DJIA decline. A logical point would be the 10,400 large Support area, having fallen through Support Lite of 10,630, and a similar action of the S&P 500 (the Nasdaq has fallen through its line).Expecting a follow-through Wednesday morning, one way to play this opportunity ( recall Nixon's comment about the Chinese symbol for crisis was also opportunity) would be to wait for the open and watch for this test of Support, Buy protective Puts on any bounce as premiums switch from Puts to Calls, and ride the upswing like a surfer until the wave plays out. Leave the Puts in place ( they're probably toast anyway) and trade in the Calls/ long stock on weakness - then await the decision of "the They" to push this Bull farther up or follow the conventional wisdom of: a tired 3-year Bull, a seasonal ending of a Nov. to Apr. cycle, a 7th rate hike, yada,yada. See previous columns of www.mktsentiment.blogspot.com for improving Bearish (read Bullish) indicators.

With record numbers of dollars coming out of Money Market Funds, mostly into the crowded trade of short term bonds, anyone who has a minimal knowledge of covered call options and/or an interest in hedging stock market exposure might want to check out: brentleonard.com for an alternative strategy that is low-risk as well as highly rewarding. For those of you wanting more details and actual trading results, a new book is available for $14.95 at Amazon.com: Zero (IN)Tolerance

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