15 replies to this topic

[denleo]

NAV, I wish I knew. Actually I think the report is going to suck, but the market reaction is a different story. Denleo

[NAV]

The es is breaking its uptrend as I type.

Nope ! The trend line is intact so far.

[arbman]

I see how the tech made a come back here from the Tue lows, although the growth issues such as the industrials, consumer discretionary stocks are still relatively weak. I bought some semi and OIH calls for the hedges. I notice that the broad service issues and the utilities are still the ones supporting the break out and today the bearish health care issues also joined. I think if any break out to occur, it should come from the tech stocks to stick, otherwise the gap will follow immediately a crap. So far the leadership is still bearish and another break out attempt until the middle of the month (without a sizeable pull back early next week) will be still a terminal move, imho. I think an immediate sell off on Monday and perhaps on Tue has the potential to fuel another rally toward the expiration week... I don't need to say I am bearishly biased here, I guess. I found about 170 break out stocks over the last few days and many of them should not last much, I went selectively short. I expect almost all of their gains to be given back in May. Generally, my indicator goes up to 250-280 break outs before the trend gets exhausted. So, there is room, but in 2004 and 2005, the secondary rallies peaked from these levels. So there is a good chance that this indicator will not significantly improve, if a downtrend to begin from the gap levels...

[arbman]

BTW, evident from the new highs in January also, the peak reading was recorded with the 284 break outs back then --many issues making new highs, the number of break outs in February was less. It is currently less than February's as well. My break out definition is fairly simple; it is the price rallies with the increasing volume and 9, 20, 50, 200 dmas and these should be also either stacked up on top of each other or crossing upward. They don't have to make new highs. Even the worst stocks exhibit upward bias toward the end of the trend exhaustions before a sizeable correction. I look at the sector composition and leadership to judge the sustainability of the break out structures, it's been bearish from the lows according to the previous rallies that failed in terms of intermediate term rallies. This rally has all the characteristics of a blow off move with the inflationary leadership as a secondary rally --the sentiment strangely surged too, I believe it will end up being a left translated 20 wk cycle when all said and done... In terms of the open interest here, we have a strange resolution at the end of the day. Although there is an increase in both put and call open interests for options, there is a net decline in the calls. The crowd traded heavily the call options, but they did not take them home. The bears took home more than the bulls did actually, so there is still a wall of worry among the bulls by keeping the hedges to the longs and perhaps a bit confidence among the bears that the gap resistance will hold. There is always the possibility of a sharp sell off and the beginning of the new downtrend, but a quick sell off early next week should increase their confidence for a failure to close the gap for a few remaining bears, similarly a quick rally has the greater odds now to attract a bunch of bottom pickers such that a subsequent rally can easily decimate the bears and bolster the tendency to hold the long positions through a late April or early May decline... - kisa

Edited by kisacik, 05 April 2007 - 06:11 PM.

[arbman]

FWIW, the Monday after the Good Friday has about 38% chance of upside historically, it had 71% of upside chance today. It did close higher albeit on quite low volume and it translates to another test lower at least for Monday. So a gap up or down and further sell off is more likely. Almost all of the major US holidays have the tendency to close higher ahead of them and lower afterwards, fyi... - kisa

[arbman]

I am also absolutely bothered by the relatively rising implied volatilities. Either the IV costs will come down quickly and has a lot of holiday and job report premium or it is saying that the low volume rally with the poor leadership from the lows is actually not to be believed. The next low will tell us whether the worries were overblown, but I don't think so, the price break outs are not confirming with the overall breath and the liquidity picture out there at this point for the intermediate term, imho... I would like to repeat, I do not believe the high volume sell off was a panic at the top, it was an intense initiation and the market is testing this at the moment and it will find out that the higher valuations will be rejected so early. I think there will be a tremendous tech rally from the middle of this year though with all the relative strength it started to exhibit now. Perhaps the tech will not be damaged at all in the next decline, I actually expect this, however from the summer lows, and not right here... - kisa