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Those who questioned the rational for selling puts (to close) Thursday may
find out why this morning. Intraday and end of day the volatility
conditions favored selling puts and by the end of the day price,
volatility, breadth were all voting for a rebound from an extreme oversold
condition. On the AMOSS chart the 90 day component has rebounded each time
it dropped into the neutral zone 4. Intraday it even dropped into the
oversold side of neutral. Most importantly, the Zone Timer is at a
reversal point where buy signals occur. Thus, I exited the puts as it
entered and stabelized in this zone. On the Modified Volatility front the
MVI also dropped below its lower band intraday and closed above it. This
bodes well for a rally/consolidation on Friday. Finally on the breadth
front the McClellan Oscillators of issue and volume are in the process of
making a double bottom.
BobR
http://www.oextrader.com/momentum.htm
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