Whether investors get their somewhat infamous Turnaround Tuesday won’t be known for several more hours, but the action is potentially a good start for intermediate strategists. In our last report the market-based concept of the FTD or Follow-Through-Day was reintroduced. It’s been a while, several months in fact, since we’ve had the opportunity to use this method designed to locate an intermediate bottom of notice. If Tuesday’s positive price action holds up, it will mark the first step in this process, as we could define the session as an Attempted Rally Day. From there, a time window starting on Friday begins for an event known as the Follow-Through-Day and described quite well in our last report, for those in need of quick review.Technically, directional strategists might also be interested in the quality of strength, for the market, in the interim. While we can anticipate the FTD, a move that’s too severe and / or into potential overhead resistance, could represent a bear market rally, and hence an opportunity to locate strategic shorting opportunities. In fact, looking at the above daily view of the S&P500 ($SPX) we can see just how oversold the market was based upon Bollinger and RSI analysis, and why the bulls shouldn’t get too excited beyond seeing “a bounce” just yet. The observation is that until a corrective low is established, the bears will attempt to have some staying power, particularly so, when conditions like the fore mentioned are in place. And after a very persistent eight-month rally to cap off a four-plus and twenty-year bullish cycle, that means the burden of proof is still on the bulls’ shoulders. The following factors and anecdotal evidence might be considered relevant in determining a suitable, limited-risk strategy in the coming days and weeks ahead.MARKET LABBullish Technicals
January Effect positive finish
Correction underway with -3.5% to -6.7% tallies in both majors
Extreme readings such as record breaking VIX percentage spike and NYSE TRIN
ETF Liquidity Premium relative to cash index trading
Monday marks potential pivot for FTD count and intermediate trend reversal
Bearish Technicals
‘Extended’ 4 / 20-year bearish cycle convergence
No FTD signal or count underway as of Monday evening
30% [versus highs of 19.8%] in VIX has historically marked fear in the marketplace
Potential overhead resistance and three months worth of traders looking to ‘breakeven’
Corrective periods up to 10%
GROWTH STOCK ANALYSISWith further oversold conditions in many and most products now (Tuesday premarket) setting up for some version of a relief rally off a hard opening gap, there’s not much to do to the existing watchlists, except peel off a couple of stocks from the Bears Screen that are now in very oversold territories. While that’s a good thing of course, names such as Goldman (GS) and American Eagle (AEOS) are more in position in the short-term to haunt fresh short initiations than not. At the same time, of course, monitored longs from the Bull Screen have mostly pulled lower too. However, oversold in those stocks is viewed as being a potentially benevolent technical situation. It almost goes without saying, but I will anyway, that with so many stocks in the listed universe demonstrating similar extended patterns of investor panic, no changes have been made. Traders could always try to switch gears and look for a few issues that showed relative strength over the last two sessions, while the market forged fresh lows. However, that’s by no means a guarantee that those stocks, the few that exist, will demonstrate the same tenacity when traders are performing functions such as scrambling to ‘snap up bargains
That was an opinion of a professional trader. My take is the following.
We have been in a very long Bull Market ...we were overdue (as was the world markets) for a correction. We had what was from my 30 years ...a pretty scary event. Even though it was the most advertised correction in those 30 years ...it put in some pain. So we are in the last thows of a Bull market and the question is ...why do we drop and when do we drop ...1st things first for the very short term ...the INFLATION NUMBERS PPI/CPI are going to STINK unless the gov't cheats them again ...this will not be good for stocks ...it may be just one day ..a test or it could be several days testing ...but there is definitely not an all clear out there yet...But again ...as I have said since we hit the lows ...we will not go through 12,000 in my lifetime and that should give everyone the motivation to buy stocks for this last Bull Run....these historically have been pretty amazing ...let's put it in context ...pre-pres -electio years normally up 15% ...so thats 18% from hear...last leg of a Bull market usually up 10% from the day one rally so if we put our heads together and say that this BULL market may only last until OCTOBER ..and we need to rally some 205 between now and then .....I say ..BUY BUY BUY TECH TECH TECH
QLD
QQQQ
SMH
GLW
NSM
EMC
INTL
AAPL
GOOG
QCOM
etc........
And for those of you that hit the Double in a day with GS calls ....YOUR WELCOME ...I Know you would have bought them without me right ???
And for you that don't like options the stock of these financials are CHEAP still
XLF
GS
MS
MER
LEH
WB
DB
and for those who just like good stocks
Buy some
DOW
T
VZ
MO
NKE
AMR
CAL
These are the last recommendations I am giving until I get some intersted members and some comments in here ..
Paypal $75
yearly to : tomandprisha@msn.com
Tips accepted for the job since you all joined !!!!
Hope it is the best deal you have gotten this year !!!
Tom
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