Change text size

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

MARKET ANALYSIS

Bulls dig in deeper to kick off the week on more of the same ol’, same ol’ financial woes still finding an audience… well, kind of. For the two-day period the “SPYder” (SPY) and “Cubes” (QQQQ) are off .61% to .81% on mixed and seasonally adjusted ultra-light bull.

Highlights for the bulls over the two-day period include:

• Bulls cheer buzz of Korea Development Bank’s interest in Lehman (LEH).
• Warren Buffett’s CNBC interview teases bulls with attractive values in equities, acknowledging no bets against the US Dollar and Fannie & Freddie (FNM, FRE) still looking for private investment.
• Black Gold (USO) slides 5.75% on stronger Greenback, re-opened Turkish pipeline and aggressive profit-taking following a disappearance of Thursday’s bullish catalysts.
• “BTE” from Gap (GPS) prompts retail strength (RTH) on Friday.
• Mixed but bottoming-process worthy data on existing home sales Monday.

Bearish catalysts worthy of derailing the bulls include:

• Friday’s Moody’s downgrade of Fannie & Freddie to ‘Baa3’ from ‘A1.’
• AIG (AIG) swoons on Credit Suisse estimated loss bump up to $0.86 per share and ‘Negative Watch’ at Fitch.
• Per Dr. Cramer, despite Fannie & Freddie taunting bears Monday with slight gainers, investor’s bully broader market lower on disappointment of Treasury failing to act over the weekend.
• SK regulators tell KDB to “Do their homework” i.e. cautious approach with any acquisitions of foreign banks such as Lehman (LEH), which disappoints bulls stateside.
• Regional Bank of Topeka ninth FDIC-insured casualty this year due to construction and development loans.

Market Snapshot

Figure 1: S&P500 (SPY) Daily

“Handling” the bullish deltas, continues to be a difficult proposition. Following a failed ascending breakout two weeks ago, an EW4 bearish signal has continued to hold its lower high pattern pivot. On the other hand, much lighter volume over the past two sessions and overall, little headway for the bears over the past week hasn’t exactly been a pleasure for those directional strategists either. All told and still being emphasized: “Sell the rips and buy the dips” within a “Trader’s Market” and softer delta ambitions, appear a good choice in a hard-to-handle environment.

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 LAB

Bullish Technicals

• Mid July sentiment / extremes worthy of intermediate low.
• Late market FTD 7/29.
• Statistical short-term holiday edge at Monday’s close and hold into Friday’s close per sentimentrader.com.

Bearish Technicals

• EW4 SPY short signal via PS EBOT.
• Weekly downtrend major averages October highs.
• Lackadaisical VIX readings.
• Sentimentrader.com equalized Smart$$/Dumb$$ rating.
• Waning importance of mid July lows at current levels.

RADAR WATCH

Since our last report, mostly wiggling-type action within daily and / or weekly chart consolidations means there’s little to report with the watchlist components below. After some personal time away from the market, I’m finding (still) plenty of stocks which appear to be setting up directionally for both bears and bulls.

The somewhat skimpy grouping of names below reflects an attitude of not getting too excited one way or the other. Bottom-line, technical set ups haven’t been consistent of late. Until a heavier volume breakdown below last week’s lows or a higher volume jump above Friday’s highs occurs, bulls and bears look to be served well-done on the summer grill.

RADAR SCREEN

The following optionable stocks look to have a combination of technicals and fundamentals that might warrant further investigation based on a trader’s own methodology and risk acceptance. The list is not a recommendation and is intended for educational purposes only.

The Bulls

Table 1: Bull Watch list

Non-Directional

Table 2: Basing Watch list

The Bears

Table 3: Bear Watch list


Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Recent Articles by Chris Tyler, Optionetics.com

• November 20, 2008
  Growth Stock Swing Option: Nov 20, 2008
• November 20, 2008
  Midday Action: November 20
• November 19, 2008
  Hot Shots: "Sell-e-brate Dow 8K?"
• November 19, 2008
  Midday Action: November 19
• November 18, 2008
  Option Watch: Nov 18 - Fizzling Option Forecast?