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Morning Update

2/26/2014 5:52:42 AM

Good Morning Traders,

We're in a hurry up and wait market, awaiting a catalyst, which leaves both sides vulnerable. If there are no sellers, the market can continue to drift sideways to higher on light volume. But during this drift, the internals will shift.

First, we see traders shift to a more bullish position. This change has been gradual. And this also brings more individual investors into the market - which is normal just before a large fall...

Equity Put/Call ratio Chart

Second, us newsletter writers are bouncing back to our bullish state. Relatively speaking, the crowd is leaning bullish.

Investors Intelligence % Bulls minus % Bears Chart

And finally, the barometer, a formula that tells us when to buy and sell. It technically remains in Buy Mode, BUT this level suggests that future gains over the next month will be small to negative 5% range...

Daily Stock Barometer Chart

And always of note is the potential for the market to continue higher in a liquidity advance. The more days it spends above it's 9 day moving average is a consideration. We're at 13. One down day can end that streak. At that point, we'll issue our top 100 or so PUT options to play the downside. We've already issued our top 100 covered calls to profit from the sideways movement. If the markets continue sideways, we'll issue more covered calls this weekend.



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