Market still hasn’t tipped its hand
The market still hasn’t tipped its hand on whether it’s currently basing at these levels – above the recent lows – before moving higher, or consolidating before moving lower. If the market does move lower in the near term – amidst high bearish sentiment and still extreme oversold technical conditions – it would very likely be setting the stage for a solid intermediate- or longer-term bottom of some sort.
New positions
Frontline (FRO) – On Tuesday, as the stock rallied with the market, I rolled out the November 45-strike puts I had sold against FRO on 09/02/08 by buying them back and selling an equal number of May 35-strike puts for a small net credit:
FRO, like the market, rallied significantly from its recent lows, suggesting a potentially improving intermediate-term picture, although it will take more time and stable prices (equal to or above the lows) for this to be confirmed. A move back below the recent low at about 25 could suggest a move to lower support at the 18-20 or 13-15 levels.
Watchlists
No stocks of interest showed up on this week’s “upside strength” scans.
In addition to other stocks already previously mentioned in recent weeks, the following showed up on this week’s “oversold” scans of beaten-down stocks of interest, suggesting that likely further near-term weakness may represent a buying opportunity: Canon (CAJ), CenturyTel (CTL), Cintas (CTAS), Intel (INTC), and Veolia Environnement (VE).
