The market stumbled into a correction Tuesday as fears rose that the European Union's financial bailout of Greece was too little, too late. The Nasdaq composite slumped 3%. The NYSE composite unwound 2.7% and the S&P 500 2.4%. The Dow fell the least, down 2%. Volume swelled nearly 30% on both major exchanges.
Tuesday's sell-off marked the Nasdaq's biggest drop since 04-Feb-2010 and marked a shift in our Market Direction call from "Caution" to "Stop Losses".
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From: Gilbert <gilbert_arevalo@
To: CoveredCallFund-
Sent: Tue, May 4, 2010 11:37:51 AM
Subject: [CoveredCallFund-
I'll make the update "official" after the close, but we have entered our "Stop Losses" or market in correction mode.
It seems the "Technical Indicator" concurs:
"Namely, each index is rattling the cage on significant support as follows:
- S&P 500 support at the March peak of 1,180.
- Dow industrials support at the March peak of 10,955.
- Nasdaq support at its one-month range bottom of 2,450.
"Looking ahead, a close below these areas places each benchmark under its 20-day moving average - a widely-tracked near-term trending indicator - and would also mark a "lower low" for the current cycle.
"Both events would technically signal a near-term trend shift, opening the path to a deeper pullback. (On a breakdown, the first downside target rests at the January peak, around S&P 1,150.)"
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--- In CoveredCallFund- Mentoring@ yahoogroups. com, Gilbert Arevalo <gilbert_arevalo@ ...> wrote:
>
> Stocks took their hardest one-day hit since early February as the uptrend came under pressure. The NYSE composite dropped 2.8%, the S&P 500 2.3%, the Nasdaq 2% and the Dow 1.9%. The Philadelphia semiconductor index plunged 3.5%. Volume was higher on both major exchanges.
>
> The negative action slapped all four major indexes with a distribution day. The NYSE composite has seven distribution days, the most of the indexes. The Nasdaq has the fewest, with three.
>
> The sum of that negative action has put the market's uptrend under pressure, a shift reflected in a change to our Market Direction bias to "Caution" from "Green Light" - effective Tuesday, 27-Apr-2010. This should put investors on alert. Watch your holdings carefully and don't be shy about raising cash by culling your weaker stocks. Approach new buys with a healthy dose of caution until the market reasserts itself. Our Current Market Direction call is also posted at the top of the Covered Covered Candidates page.
>
> G
>
>
> ____________ _________ _________ __
> From: Gilbert <gilbert_arevalo@ ...>
> To: ConservativeOptionS trategies@ yahoogroups. com
> Sent: Tue, March 2, 2010 10:48:19 AM
> Subject: [ConservativeOption Strategies] Re: My 2010 CC Trades, Market Direction update
>
>
>
>
> The Nasdaq's "follow-through" on 01-Mar-2010 confirmed the (tenuous) uptrend. Please note a move back to "Green Light" from "Stop Losses" mode.
>
> What that means is we will once again "test the waters" with high-yielding covered call plays, while sticking to our stop-loss rules.
>
> G
>
> --- In ConservativeOptionS trategies@ yahoogroups. com, "Gilbert" <gilbert_arevalo@ ...> wrote:
> >
> > Indeed, fully cashing out Thursday proved prudent as we entered into a correction or our "Stop Losses" mode on Friday.
> >
> > We will now "wait-and-see" - watching the market's price and volume action. A follow-through confirmation will put us back into our "Green Light" mode.
> >
> > G
> >
> > --- In ConservativeOptionS trategies@ yahoogroups. com, "Gilbert" <gilbert_arevalo@ > wrote:
> > >
> > > Market Direction: "Caution" - effective 20-JAN-2010
> > >
> > > G
> > >
> > > --- In ConservativeOptionS trategies@ yahoogroups. com, "Gilbert" <gilbert_arevalo@ > wrote:
> > > >
> > > > Not likely. In my experience, when a stock drops enough to trigger my sell rule it is best to avoid re-entry. It usually turns out there is a reason for the significant decline.
> > > >
> > > > Furthermore, once all my positions (as have again in 2010) are stopped, most often the market is pending a downturn. Countless growth stocks (2009 winners) are now slicing through their 50-day moving averages.
> > > >
> > > > Not a good omen. Plus distribution days are at an elevated level (can indicate a top). I will wait for further confirmation to the upside before getting into any more positions.
> > > >
> > > > G
> > > >
> > >
> >
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