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MARKET ANALYSIS

Since our last report, investors decide to suit up in their bullish pinstripes and play ball in front of the holiday. For the three-day period the “Cubes” (QQQQ) and “SPYder” (SPY) are up 1.33% to 2.46% on lower but spirited attendance levels. 

Highlights for the bulls over the three day period include:

• The Fannie & Freddie Show (FNM, FRE). Tuesday’s ‘unwarranted concern’ from Goldman and ‘well capitalized’ words from Merrill on Wednesday. Similar vote of confidence on Thursday for Fannie by analysts at Lehman and confidence-boosting ouster of brass at Freddie implying no Treasury rescue needed.
• Stock buybacks at Anadarko (APC) and Coach (COH).
• “B-T-E” economic data on consumer confidence, housing, claims and GDP.
• MBIA (MBI) reinsurance news of doing business like the good ol’ days.
• Caterpillar (CAT) report of China growth.
• Price schnitzel in Black Gold (USO) on easing Gulf supply concerns, IEA pledge and bearish natty gas report.
• Mixed retail earnings news (TIF, SHLD and MW) receives show of support from Wall & Main.

Market Snapshot

Figure 1: S&P500 (SPY) Daily

A statistical short-term edge noted in Monday’s report has performed quite admirably over the past three days. Technically, the bullish gesture is supposed to last through Friday’s close. However, the observation is not to look a gift horse in the mouth. Given that existing light volume conditions (outside of the financials), have already made the rally a bit more elusive than the talking heads would lead us to believe, being a patriotic bull or grizzly ol’ bear (for that matter) in front of the extended weekend, looks like a good recipe for getting grilled.

The following factors and anecdotal evidence might be considered relevant in determining a suitable, limited-risk strategy in the coming days and weeks ahead.

MARKET LAB

Bullish Technicals

• Late market FTD 7/29.     
• 3-Week mostly lateral consolidation broader market.
• Minimally overbought conditions price basis.

Bearish Technicals

• EW4 SPY short signal via PS EBOT.
• Weekly downtrend major averages October highs.
• Lackadaisical VIX readings.
• Sentimentrader.com equalized Smart$$/Dumb$$ rating.
• Waning importance of mid July lows at current levels.
• Short-term Pre-Holiday edge played out.

RADAR WATCH

While there’s been less wiggling in the broader averages and a bit more “zoom, zoom” since our last report, conditions elsewhere, by and large, remain inconsistent. When that changes, whether the market is going up or plunging lower, the lists below can grow to reflect that all-important shift and the only thing which really matters to investors and traders alike. That being said and not wanting to sound overly grizzly, the optimist in me has allowed Wednesday night’s highlighted stocks from this week''s Hot Shots to be posted to the Bulls Radar below. Have a great holiday.

RADAR SCREEN

The following optionable stocks look to have a combination of technicals and fundamentals that might warrant further investigation based on a trader’s own methodology and risk acceptance. The list is not a recommendation and is intended for educational purposes only.

The Bulls

Table 1: Bull Watch list

Non-Directional

Table 2: Basing Watch list

The Bears

Table 3: Bear Watch list

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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