A tale of two markets
As shown by the current trend analysis, last week’s U-turn in most of the major indices erased the positive bias that had appeared in the previous week’s trend analysis, with one major exception – the technology-heavy NASDAQ index. This is underscored by the almost unanimous green “all clear” signals currently showing on most of the semiconductor stocks on the Tech Stocks page of the trend analysis.
Unfortunately the same can’t be said of many industrial blue chips, most of which seem to have re-established a bearish bias. So where does this leave us? In terms of the big picture, it may well indicate – and prudence suggests it’s probably best to assume – that the intermediate-term downtrend has re-asserted itself. But the picture has definitely been muddied.
As for this coming options expiration week, I’m now assuming a down to sideways bias. As several of my short puts are now trading in the money, this means that – unless I take evasive action – I can plan on being put some stocks. For the most part I’m entirely comfortable with that scenario, but will play it by ear as the week progresses.
Meanwhile, I’ll be looking for opportunities to start selling some June puts. In addition to the stocks already mentioned in previous posts, I’ve added Allstate Corp. (ALL), GlaxoSmithKline (GSK), Consolidated Edison (ED), Fiserv (FISV), and Microsoft (MSFT) to my watchlist. I’m also looking at Steel Technologies (STTX), Limited Brands (LTD), and Parket Hannifin (PH) as possible opportunities, but only on further weakness.
