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MARKET ANALYSIS

Since our last report another wave of pessimistic headlines has recent “Obamaistic” ways looking like a “Bull TARP!” For the two-day period it’s been a “less goog” time for bulls as the S&P500 (SPY) gives back 6.64% and a bit more than two-thirds of prior bargain-hunting proclivities.

Highlights for the market’s “anti Obamaistic” behavior of the last two sessions:

• Thursday’s “Fourth & Long” gets sacked by bears on Friday. Poor retail sales data and retail confessionals / warnings (JCP, ANF, KSS, JWN). Mobile phone giant Nokia (NOK) warns on 2009 sales. Defensive Bernankespeak emphasizes central banks prepared to act. Looming G-20 weekend meeting and hedge fund “redemption day” chatter hangs over bulls.“Monday Mourning” for bulls on continued bearish drivers. Retailer Target (TGT) cuts dividend temporarily and Lowes (LOW) warns for Q4. “@$#!! Citi” (C) lays off 50,000. Bearish analyst action on Apple (AAPL), Dell (DELL), Altera (ALTR) and negative press for search company Baidu (BIDU) put Naz’ under pressure. G-20 meeting finds policymakers in favor of stronger regulation and stimulus for markets but no concrete plans of yet. Market’s “sell-e-brate” official recession acknowledgement by Japanese officials.

Market Snapshot

Figure 1: Google (GOOG)

After tagging a described 50% retracement at $325 and reversing like clockwork on Friday, shares of Google (GOOG) could very well have many eyeballs out there interested in bearish positioning. For this market observer though, Thursday’s bullish and near engulfing candle takes precedence for the time being.

In conjunction with the broader market’s “Mama Bottom Undercut”, heightened pessimism and a generally decent time of year for investing—I’m continuing to harbor a bullish appreciation for the market. That stance however, does realize the existing “Mama Bottom” could wind up being a descending triangle breakdown in the S&P500. There’s also some concern over an absence of growth stocks forging ahead and a possible bearish harbinger. Net-net, curtailing the bull with a “Buy the dip” approach and focusing on strategies which sell the upside “too infinity and beyond” juice, remain the approach of choice for this market observer.  

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

• VIX all-time-highs of 89.53%.
•  “Mama Undercut Triple Bottom” S&P500 with MACD divergence.
• Seasonally kind Q4 tendencies.

Bearish Technicals

• Lack of growth bases and sector leadership.
• Descending triangle / bear flag style situations plentiful.

RADAR WATCH

In keeping with the above analysis that the current “Mama Undercut Bottom” could always go on to complete a more bearish-sounding descending triangle pattern low—I’m posting a couple names to the bears watchlist below. That being said, this corner would prefer to see the bears get the stuffing ripped out of them before turning less “Obamaistic” at higher levels of “Buy, Buy, Buy!” madness.  

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. 

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