The market gapped up at the recent highs at the open only to give back all of the gains shortly after the opening bell. Today marks the seventh straight day of what has been a very tight trading range in the major indices, particularly the S&P (SPY). I expect to see a breakout of the range within the next three trading sessions. Options expiration is only a few days away so volatility should pick up and we also have a few key economic releases over the next few days which should give the bulls or bears the conviction needed to move the market outside of the current short-term range.
The Dow and S&P are at the high side of neutral territory while the high-beta Nasdaq 100 and Russell are on the low side. If the high-beta indices can move the market lower, preferably to a oversold state I would be willing to look at taking on some long positions with the historically postive seasonality ahead. Seasonality has been rather tricky over the past few months so it pays to be patient in this type of market. Wait for the high-odds set-up. We talk about our preferred set-ups in great length in our newsletter and White Paper. Anyway, have a great night and pay close attention to the areas of support and resistance that I have mentioned over the past week.
RSI Wilder (5) for December 13, 2006
- SPY - 66.5 (neutral)
- DIA - 64.1 (neutral)
- IWM - 49.4 (neutral)
- QQQQ - 45.7 (neutral)
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Kindest regards,
Andrew Crowder
Chief Investment Strategist
Crowder Investment Research, LLC
www.crowderinvestments.com