Yesterday, I indicated that, "Technically, it's looking a bit like mid-December here." This view largely was precipitated via index MACD and RSI performance. Both measures, bullishly positioned, raised no cause for concern the market might unexpectedly turn over. Considered, then, from the perspective of finite, [very] near-term, Elliott Wave-related possibilities ... a strong push higher in the market seemed likely.
One profitable April OEX 390 Call later (sold right at the top ... lucky! ... at a tripled premium) ... now, much like mid-December, could come a fairly decided (yet relatively tame) pullback...
The [bearish] S&P 500 price-RSI divergence noted above similarly is confirmed by NYSE and NASDAQ McClellan Oscillators (which are indicating some measure of underlying weakness is building).
The CBOE Put/Call Ratio's MACD is positioned similarly to recent instances when the market was poised to sell off.
Keep in mind, too, the market bounced sharply subsequent to selling during those recent instances noted above. As you can see via markup on the previous chart of the S&P 500, I am anticipating much the same near-term ... projecting a solid, further advance off March bottom following any sell-off unfolding over the next couple days.
Lately, 5-minute RSI extremes have reliably signaled a pending turn in the market. So, there's another reason to suspect the market might imminently come under some selling pressure.
Per the speed of the market's pending decline, I am only guessing. Since RSI on daily index charts can be expected to remain on the buy-side (above 50) selling might unfold rapidly ... reaching bottom intra-day ... only to see losses largely erased going into close (Monday?). Something like Wednesday, March 25, 2008.
* * * * *
© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.
There's an easy way to boost your investment discipline...
Get Real-Time Trade Notification!