Change text size

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

MARKET ANALYSIS

Vowed sponsorship from the G-20 has a few more bulls pledging their extended allegiance in Monday's session. For the two day period the SP-500 (SPY) is up 2.55% on mostly weak attendance that nonetheless has some folks "Jonesing" and others declaring a Follow-Through Day.

Key highlights for buying a little "MOOyah!" during the two day chase:

• Well-received analyst action for GE (GE), Amazon (AMZN), Macy's (M) and Traveler's (TRV) on Friday.
• Poor labor report ensures rates to remain low.
• G-20 weekend re-assurance of policymaker's commitment to global economies.
• Tied relief bid into riskier green shoots assets and currencies (GDX, SLX and OIH) and out of US Dollar.
• M&A / partnership goodies (KFT, CBY, GE and CMCSA) on Monday.

Key highlights for "sell-e-brating" a little during the market's latest lift:

• Jobless recovery remains intact based on Friday's monthly jobs report.
• Larger technical outlook remains suspect.

Market Snapshot


Figure 1: S&P500 (SPY) Bear Market Rally?

So much for the ol' "Profit from It" courtesy of a potential H & S top called to my attention by CNBC last Thursday. Of course, nobody forced this strategist to see the pattern as the latest one worthy of stopping bulls in their tracks. The weekly view with its ascending wedge breakdown, some daily chart help from a EW5 and this past week's lighter volume romp to the upside on top of a historic rally were already in place as cautionary signs.

By Monday's second half, gains already in place of about 2% were afforded the designation of being a (mixed) Follow-Through Day or FTD as volume finally improved just enough to beat out the prior session's unimpressive total. More to the point than fresh FTD signals, fresh highs for the Dow or whether "the best six months" for investing received more confirmation-is how friendly the trend is to bulls?

On that note, I'm more inclined to see the action as a bear in disguise within an uptrend. At a minimum, with market prices overbought short-term and a VIX that's "stretched" to 14.60% or 15% [10-SMA 26.75% vs VIX cash lows 22.78%] when rounding-being cautious as a bull makes good sense and likely "cents" to this strategist.

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

• Breakout of daily / weekly downtrend from Sept 2008 highs DIA.
• Weekly Inverse H & S being breakout from October lows. "MM" of 113 - 120.
• FTD on day six of rally per outfits like IBD.
• November thru April strongest six months for equities historically.

Bearish Technicals

• 1930 Bear Market Rally repeat states EW Intl.
• Fourth time the charm? Potential W5 Daily and W4 Weekly in SPY.
• At 65%, market's run has "Come a long ways, baby." Green Shoots priced in.
• Mostly long-term overbought market conditions/weak internals.
• Confirmed "Extended" 13-week topping as part of 13-5-15 cycle.
• Q3 "Recession is over" data confirmation.
• Estimated minimum corrective support zone 99.50 - 102 testing.
• Five day weaker volume rally off lows & "mixed" FTD spells bear market rally?
• VIX Stretch of 14.60% or close enough for trader worry mark of 15%.

RADAR WATCH

Still unimpressed with the market action, I can't get too excited about adding bullish watchlist candidates without seeing actual leadership from bases and names like Infosys (INFY). However, with the Mad Money's recent re-pounding of the table for ADC Telecom (ADCT) on October 22, I don't mind adding a "Monbacky!" situation as a fresh spec to the watchlist. Optimistically, I'm focused on ADCT's impressive weekly uptrend support positioning-which for you home-gamers, shouldn't be confused with its lowly daily downtrend.

In other parlor games, Wynn (WYNN) had been a decent winner for bears after its initial posting back on October 12 to the Bears Radar. Gains of more than 21% were there on paper before shares began to move aggressively higher in sympathy with the broader market. With the rally nearly retracing the entire journey, a test of the 50-SMA is in the works and could offer an opportune countertrend short. However, a close above 66 would have this strategist saying "no mas" technically to WYNN.

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
Senior 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

• March 19, 2010
  Midday Action: March 19
• March 18, 2010
  Growth Stock Swing Option: March 18, 2010
• March 18, 2010
  Midday Action: March 18
• March 17, 2010
  Midday Action: March 17
• March 17, 2010
  Option Watch: March 17 A Steely Call in Vale S.A.