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Ladies and Gentlemen,
Lately, as always, there has been much speculation on this forum as to
the direction the indexes are headed. And this is a more challenging
question today than it was a few months ago when on a daily or weekly
chart the bull market was clearly strong as ever and intact. Plus even
CNBC points out to the technical similarities between now and the weeks
before the crash of 87. I remember 1987.
Technical analysis is in the background of every trade I make, but not
to the exclusion of fundamentals and sentiment, which are sometimes not
fully or fairly discounted in the prices because of panic, greed, and
trader error. I know there is alot of fear out their that we are
correcting. But I still don't think we are. Fear is our friend in
sentiment analysis. If you go back to 87, you will not see the bond
yields or prices that we have today. Also you will not see as strong an
a/d line on the listed exchanges as we have now. I think the bull is
still running.
Friday's close gave me a signal to buy oex calls. Although I cannot
reveal the full methodology of my signal, it is confirmed by common
indicators such as a stochastics turn up from oversold, an engulfing
candle, a nice position relative to the support line at 873, and the
fundamentals as above. If the market rests or retraces on Monday, calls
can be bought into weakness for a rally later in the week.
Would anyone else like to share their thoughts for early next week?
Best wishes,
James
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