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Market: Still a positive bias

The trend picture for the major market indices remains somewhat mixed, but still positive overall. I’m continuing to look for put-selling opportunities into downdrafts on selected stocks.

Key near-term downside support is now at about 1450-1460 and 1430 for the S&P 500; 840-845 and 830-835 for the Russell 3000; 2580 and 2500 for the Nasdaq; and 13,200-13,250 and 13,000 for the DJIA. Overhead resistance is now about 1490 and 1500-1505 for the S&P 500; 855-860 and 865-870 for the Russell 3000; 2610-2620 for the Nasdaq; and 13,450-13,500, and 13,700 for the DJIA.

New positions
No new positions this week.

Watchlists
Stocks of interest showing up on this week’s “upside strength” scans include Aluminum Corp. of China (ACH), American Science & Engineering (ASEI), China Petroleum & Chemical Corp. (SNP), Harris Corp. (HRS), Illinois Tool Works (ITW), Nam Tai Electronics (NTE), Telefonica (TEF), and Western Digital Corp. (WDC).

New candidates of interest on the “oversold” scans include Allegheny Technologies (ATI), Countrywide Financial (CFC), Genworth Financial (GNW), JP Morgan (JPM), Matsushita Electric Industrial Co. (MC), Mattel (MAT), Precision Drilling (PDS), Toyota Motor (TM), and Whirlpool Corp. (WHR).

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This entry was posted on Sunday, September 2nd, 2007 at 8:11 pm and is filed under Analysis, Market, Watchlist. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

2 Responses to “Market: Still a positive bias”

  1. Dear Sir,

    Thank you for your continued posts. Also congratulations on your great returns from the last expiration cycle. Interested how the most recent shakeout (or volatilty) will play out for you in coming exp cycle.(all the best).

    New bottom forming or is the past volume to light to provide confidence ? Still watching and waiting for the shakeout to end, but the “V” bottom may have come and gone and missed it again!

    The liquidity issues still have another leg or two to play out I think, so I’m still in “chicken mode”. Probably not a good think, like deer in the headlights, you eventually hit one…or run over it..

    The recent volatility gives one a renewed senses of the risk in investing and reward if your on right side of the trade.

    Back a few posts you made reference to the Elliot Wave cycles, which I have tracked off/on and for major indexes. Not sure I really get it, but as and engineer, I can’t argue the principal. Will try looking at stocks and see how it works outs as longer term prediction of direction..

    More questions to ask, but short on time. Thank you for your posts. They still provide personnel confidence it can work. Now only if the marker will cooperate,, .

    Best Regards,
    FS

  2. Hi,

    My sense is that patience may pay off here (i.e., maybe better buying opportunities ahead), but it’s a tough call at this juncture – the “noise” level is high and leaves room for moves in both directions. Since I focus only on stocks I wouldn’t mind owning as an investor, I don’t get too caught up in all the ups and downs – in fact I look forward to the “downs” and view them as potential buying (i.e., put selling) opportunities.

    Beyond that, I don’t try to time or identify market tops and bottoms – the best I hope to be able to do is identify times of higher or lower risk and/or probablilities and adjust accordingly. And I use risk management (e.g., diversification) and position sizing to avoid being 100% exposed at market tops (for example) or 100% out at market bottoms. (In fact my approach will tend to automatically have me more invested at lower prices and less at higher levels.)

    As far as Elliot Wave, I find it useful as a general pattern recognition technique that can sometimes prove helpful in anticipating or identifying market action. Used objectively, I think it can help give a sense of the various possibilities – both bullish and bearish – that might exist at any given time. The idea that it can be used to make precise, consistently useful market predictions, however, is just silly IMO, and is just an example of a subjective interpretation trap that many of its practitioners fall into.

    Overall I think there are probably many approaches to trading/investing in the market that can work, but the best one for any given individual is the one they are most comfortable with. In general, though, I’d say that the odds probably favor those that incorporate a longer-term perspective.

    Thanks again for your interest.