Buy Signal finally out

Although long wave analyst predicted a crash in 2007 but right now it should go back up. Notice the low of the day was above 714s1 and it closed near the high of the day. Buyers were not out in full force yet but the downward slopping channel is bullish. Tomorrow's numbers are 720r1, 718pvt and 716s1. Nov OEX 720 calls are good.

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Amazing reversal

The anticipated reversal got delayed a day. The good INTC report and the tame PPI got hammered by the horrible 10% decline in housing starts in a month and the drag from IBM. This is what unfair weighting would do to the index. Luckily, it was a V reversal in the afternoon. It closed above the daily pivot 719. The numbers for tomorrow are 724r1, 719pvt and 714s1. There is a good chance that it will hit 727ish in the near term.

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Reversal??

The first down side target of 717ish was reached today. Although the price action shows no sign of turning, the volatility index indicates early sign of reversal. It is still in OS zone and it has to clear 719 tomorrow for any sustainable long. The next downside target is 708ish. This of course depends on CPI Wednesday. After hour, INTC announcement of 3Q profit leap elevated related technology stocks such as RIMM, AAPL and GOOG. All were up nicely after hour. Tomorrow’s numbers are 721r1, 719pvt and 716s1.

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This came as no surprise…

ID/NR4 is a powerful setup. As soon as it failed to break above 729r1, OEX Nov 725 puts were good.It has entered oversold zone, and whether it will stay there depends on CPI tomorrow (my mistake, it should be Wednesday Oct 17 instead). If tame, as in PPI, a rebound is in place. Watch 728r1, 723pvt and 717s1 tomorrow. See how the range expands after a contraction. If it cannot close above 723, brace for more downside to come. Today, the technical damage is done. All observations mentioned in the past few days materialized. Even Bradley is on target.

As an aside, there was a block of approximately 3,000 AAPL Nov 170 call contracts went through today. Someone must be expecting another blow out earning from Apple Computer, come Oct 22.

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Tame PPI

So the bears did not get the follow through today. OEX spent most of the day hovering around the pivot 727ish. The numbers for Monday are 729r1, 727pvt and 725s1 and once again we have a small range and is an ID/NR4. The market will break out from this range. The daily bias is still down. It is hard to believe that the mini-correction lasted one day. There is a very high probability that it will continue next week.

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History does repeat itself

If you can identify certain patterns and interpret them by mathematical algorithms, you have a winner. The sell signal was already out yesterday and warning signs were written all over a couple of days ago. One has to discard the intra- day variations to maintain the overall picture. The rally this morning was based on one company’s (WMT) outlook on retail. The rest of the retail industry was lack luster. Further, if one examines closely the Trade Deficit report today, the import price index was inflationary. However, the rally kept trucking along until finally one ECB came out to say specifically that inflation was rising, everybody ran for cover.

OEX Oct 730 Puts and OIH Oct 200 Puts proved to be winners. Money doubled in one day. The numbers for tomorrow are 733r1, 727pvt and 719s1. The anticipation is for the correction to continue albeit tame PPI tomorrow. The widening of r1s1 range depicts WR7 which indicates trend exhaustion.

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Toppy

It was a classic sell signal today, although the rally in oil stocks saved the day. It closed at about pivot 728. The high of the day came within 2 points of target 732. Tomorrow's numbers are 730r1, 727.6pvt and 725s1. The trend change of Apr02 to May07's mini-correction was 42 OEX points, and the trend change of Sep11 to Oct9 was also a count of 42 points. If history repeats itself, a mini-correction of 10 to 15 points to OEX 715 is not surprising. The momentum of total index put/call ratio has increased again. For what it's worth, bear in mind the Bradley Model turn date of Oct17 (+ or - 7 days). OEX OCT 730 puts look attractive at this junction and OIH Oct 200 puts are good for more adventurous day traders.

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