Archive for November, 2009
Relative Strength and Weakness: How it Affects Option Trading
How does relative strength and weakness affect option trades?
Light Volume and Tight Trading Ranges Are In Store. Mantain A Bullish Bias.
Yesterday, the market was very quiet and it chopped around in a very tight range. Today, it looks like we are in for more of the same. Building permits dropped 10.6% to their lowest level since April. That was worse than expected and a pre-open rally quickly faded when the news came out. The CPI was a little hotter than expected, but the reaction has been negligible. The absence of news is good for bulls. It means that the current momentum and the current news (low interest rates, low inflation, solid earnings, “less bad economic figures”, and strong seasonality) will prevail. …
Stay Bullish - Watch For An Intraday Reversal Off of New Highs!
Yesterday, the market surged to a new high for 2009. Overnight strength in global markets led to a positive open. Retail sales came in better than expected and that fueled the rally. Many traders were expecting the Fed Chairman to suggest the potential for another “asset bubble” when he spoke yesterday afternoon. He stated that he has not any indications that one exists. Consequently, the market continued to show strength into the close. The Empire Manufacturing Index came in lighter than expected yesterday and that was confirmed by the Industrial Production number this morning. It edged up .1% when analysts had …
A New High For 2009. Option Expiration Will Fuel The Rally.
Last week, the market found support and it rallied back to the highs of the year. It stayed within striking distance, but was not able to break out. This morning, strong performance in global markets provided a springboard and we have new highs for 2009. Retail sales rose 1.4% last month and that was better than the 1% analysts had expected. There are signs that spending is increasing, but consumers are still cautious. The Empire Manufacturing Index tends to be volatile and it declined from 34.57 down to 23.51 last month. We have a number of economic releases this week, but …
Decent Economic News and Option Expiration Could Spark A Breakout Next Week - Be Careful!
After a big run-up early in the week, the market has not been able to penetrate overhead resistance. Wednesday, we rallied on the open to a new high for 2009 and by midday, prices backed off considerably. Yesterday, the market chopped around and finally tested the downside. In early trading today, the market has been in positive and negative territory. If you look at today’s chart you’ll notice that each dip led to a rally that broke out to new highs. You will also notice that each dip was greater in magnitude. When the market staged its last breakout in October, …