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Enron Mail |
Pre Flight Checklist for 2/01/02
Thursday 1/31 Intermediate-term Outlook (weeks): Seasonal Cycles: Positive. Coppock Breadth Indicator: Sell/Neutral. Near a Buy. Weekly MACD: Negative. Conclusion: Longs are theoretically favored by the Seasonal Cycle, but the trend is down. Breadth measures have improved, but are mixed. We remain in a Bear Market. Shorts are favored with the caveat that declines during this part of the cycle are likely to be choppy. We are Intermediate-term BEARS. Short/Intermediate-Term ITBM: Positive. Unconfirmed. Tuma Ammia: Neutral. VIX Daily: Neutral. Nearing a Sell again! CCI Daily: Neutral. 10-day ARMS: Neutral. Fast turn around. MACD Daily: Negative. Senticator: Neutral. Conclusion: Shorts are favored by the trend, but not the ITBM. The CCI allows for more upside. Any further bounce should probably be shorted, though. The VIX is rapidly approaching a Sell. Respect the trend. Short-term Tuma Ammia Turn Spotter: Nearing a Sell. VIX 30': Positive. Nearing a Sell. MACD 60': Positive. Moving Averages: Negative. Watch the SPX 1120-1123 area. Conclusion: Longs are favored but watch the VIX 30'. We are rapidly getting overbought. Expect a test of the MA's. ******************************* Last time, I said that I would look to short strength today, and I did. I didn't make any money, however. That said, the rally appears to be a bit much a bit too quickly. In fact, sentiment appears to have rapidly become overly optimistic. The VIX is close to a Sell, and while we don't have Rydex numbers, as yet, we are no longer near a buy and may be nearing a Sell. AAII sentiment shows a JUMP in bulls and a DROP in bears even as we declined. In short, we have rallied very hard, very fast, without too much pessimism having been built up on the decline. It's almost as if everyone was just waiting for it so they could buy. Does anyone really think that the market very often makes it that easy to get into a Bull Market? We have rallied above the 50-hour and that is bullish, as is the turn around in breadth. The ITBM has given a buy. That said, the first buy from the ITBM is rarely a good one. Today was the last day of the month, which usually is pretty strong (as is the first day), especially if the "Big Boys" want to make their client statements look good. The 50 day is just above, and we are incline to start shorting and make them stop us out. For those who are more nimble, however, wait for a turn down and then chase the market if you have to. No matter what, any artificial upward pressure will come off after tomorrow. The way we see things is that not much has changed since the decline, except that optimism has been very quick to return to the market. We smell a rat. This may be the positive part of the Seasonal Cycle but we find it difficult to believe that rampant bullishness will be rewarded. Meanwhile, if we step back we'll see that the weekly MACD is on a Sell, as is the Daily MACD. The trend is down. All we are doing is testing the break down. The 21-day is just above. This will likely cause the market a bit of trouble. Our favorite Gold Stocks are kicking booty. It may be time to take some profits, but if we do, we'll have to be looking to get right back in, after a short correction. ***************** OPTION TRADING SUMMARY: Trading action: None, but be alert for a Call Credit Spread idea, if we rally just a bit more. Current Positions: None. Past performance is not an indication of future returns. Options trading is not only risky, but also entails unique risks. Traders can lose a significant amount of money trading options, and should discuss this with their broker before taking any trades. ****************************** See our Web site for morehttp://www.traders-talk.com/PFFT/index.html also seehttp://www.traders-talk.com/ Mark Young President Equity Guardian Group, LLC. 859-393-3335
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