Market still on track to retest Feb highs
Most major market indices broke through yet more upside resistance levels last week, and remain in a clear uptrend. While I’m unable to run my usual trend analysis this week (I’m not working from my main computer), it’s probably safe to assume that little has changed from last week’s trend picture.
Near-term upside resistance levels are now at about 1455 and 1460 (S&P 500); 2500 and 2750 (Nasdaq); 850-855 (Russell 3000); 12,700 and 12,800 (DJIA). Key near-term downside support levels appear to be about 1450 and 1440 (S&P 500); 2470 and 2450 (Nasdaq); 840 and 835 (Russell 3000); and 12,500 and 12,350 (DJIA).
New positions
I didn’t initiate any new positions last week, but as a result of my current long position in Automatic Data Processing (ADP) (purchased 3/19/07) I now hold an additional long position in Broadridge Financial Solutions (BR) – a spinoff of ADP that was distributed to shareholders on record as of March 23. I haven’t decided yet what I’m going to do with these shares of BR.
Watchlists
I’m away from my main computer and unable to run my usual scans this week.
Dear Sir,
We have now tested the new high as you called correctly, do we role over now, or tread water ?
I’m starting to see some divergences, in some of the indicators I think ?
For us Put Sellers, do we hold our cash unitl we see the major trend provide some direction or role-over or still give way to the individual stock canidate directions indipendent of the major Indice directions ?
Have been waiting for the topping of the market, and trully missed the run-up from July. Hoping the near-term major trends provide a chance to reallocate my portfolio.
Thank you for your posts. Look forward to your next post after this week expiration.
F.S.
Hi,
I wish I knew what the market was going to do next.
I think the best one can do is try to assess probabilities and have a plan in place for various scenarios. This move to new highs seemed like the “path of least resistance” based on the trend, which was up, and the sentiment indicators, which are positive. As long as those factors are in place, I’d have to continue to give the benefit of the doubt to the upside.
That said, given the speed and extent of this up move, some consolidation would be expected. If a significant top of some sort is near – and I’d expect a worsening sentiment picture if this were the case – then I’d still wait for it to be confirmed by a change in the trend picture rather than try and predict it.
As far as put-selling opportunities, I’m always looking for individual opportunities regardless of the direction of the overall market. I generally want to have some positions on at all times, and will use overall market conditions to adjust my exposure and how aggressive I want to be in selling puts (or calls). As long as the trend is up, and other conditions and indicators aren’t flashing warning signs, I’ll tend to be pretty aggressive about selling puts into downdrafts in my candidate stocks whenever given the opportunity.
This week’s expiration should be interesting, as I have more short (covered) call positions expiring than puts. I expect most of them to be assigned – a good thing, as they represent locked in profits in the underlying stocks.