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<<I'm holding SEP GE calls via recommendation of Bernie Schaeffer (bot 7/24).
>>
I was toying with the idea of buying these calls all day. I get a keen
interest in GE options when the stock diverges slightly from the Dow. It
will come back into realignment. It always does. The B-Bands are contracting
quickly, and I have moving averages coinciding with the lower rising "band"
at about 69.
The question of course is whether the Dow will come down to effect this
realignment, or will GE come up?
I'm still very impressed by yesterdays run-up, across an upper trendline on
the Dow that started on 6/20, and a shorter upper trendline that started 7/23
(seen on less than daily data).
The action on the Dow from 7/17 has the definite appearance of being a
triangle, and the thrust above both these lines goes a long way to confirm
this. The Dow has done this on more than one occasion. A triangle thrust
upward, we consolidate for a short period (wave 2) and then up we go again.
At the moment I see the thrust up, that started at 3:30 on the 29th as the
first wave of some small "degree".
The low today just before 11:00 completed a 50% retracement of this initial
thrust. Still no confirmation this little wave 2 has completed, but it
shouldn't be too long, if any of this is correct, and a further drop to 62%
is quite possible.
Anyway, back to the plan for GE. If the Dow can confirm completion of this
little wave 2, I'll be a GE call buyer. To confirm completion of this wave
2, the Dow must at some point move smartly to the upside, and take out the
upper trendline that runs along the top of this little wave 2. That's about
Dow 8280. Now this wave 2 may continue to develop into something complex,
and the trendline may need adjustment. If the Dow first drops below 8170
that would bring into question the whole scenario, with that kind of a
massive wave 2 retracement, but that's the plan for tomorrow anyway. No fast
trendline break, no trade. I've got a "time window" at 12:40 tomorrow.
Maybe something will happen then.
PJL
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