The Embrace

We are finally starting to see investors embrace the rally this morning as there is call buying. This has been the missing ingredient for a top and a decent pullback. Ideally, I would like to see this go on for a few days before I start shorting.

I have sold the March 22.50 calls against my Vodafone position as it has had a nice run.

12 comments:

Chaos! said...

VOD. Great call.

Tsachy Mishal said...

thanks

IC said...

Do you watch ISEE for call/put buying or something else? You have been right on the button with your predictions, nice job

Tsachy Mishal said...

thanks. ISE and CBOE

Onlooker said...

Tsachy

What parameters do you watch on the ISEE? i.e. what value to do consider to be bearish (i.e. too high)? bullish (too low)?

thanks

Tsachy Mishal said...

I look at the ISEE equity primarily. I look at the current reading and a 10 day moving average. Currently, above 180 is high and below 150 is low (the range during the Bear Market was lower). We are finally seeing a high reading but the 10 day moving average is still low, which is why I would prefer to see a few days of call buying.

Tsachy Mishal said...

Since I wrote the article the call buying has petered out. Not what I wanted to see.

Onlooker said...

Thanks

I realize that using sentiment data is tricky too because it can mislead you at major turning points. It becomes confirming at those points vs. a contrary indicator. And it will If I said that right.

For instance the extremely high value on 3/9/09 just as the rally kicked off. If you saw that as a contrary indication, well, you were just wrong.

And sometimes it just doesn't help at all. Tricky to use. Gotta use extremes, and then only in the bigger context. Just one tool in the box.

Tsachy Mishal said...

A day of high call buying after a long period of extreme negative sentiment is actually a positive because it shows that sentiment is turning.

Anonymous said...

25 pts from new 52 week high. Bulls will get it done. Something the bears couldn't.

Anonymous said...

Hey anon, thanks for the chart on PAY yesterday. Looks like a winner!

No problem. Here's another money maker for you... CEL

:) your welcome, peeps.

I also see my SWHC call is starting to pay $$. Remember hold it until May 1. Should get to 5.5- as much as 6.50. EZ money.

Anonymous said...

And finally, Smith & Wesson Holding Corporation (NASDAQ:SWHC) may well be the market's best-kept secret. Better still, SWHC may be in the verge of a significant move higher, if my read on the technicals is accurate.

On the chart below you'll see three subtle attributes you should want to see in all your bullish setups. The first one is simply that SWHC is now making higher lows, for the first time in a long time. That trend only started in late January, but that'll work. The second bullish clue Smith & Wesson Holding Corporation are serving up is today's attack on the 100 day moving average line (purple). It's not cleared it yet, but it's getting there [it may take more than a day]. Thirdly, SWHC is now rising in price on rising volume. That's tough to see on the chart, but on my zoomed-in version, it's there. In other words, the tide is changing. In fact, on a weekly chart of Smith & Wesson you'll see a clear bullish MACD crossover.

What's even more compelling about this stock, however, is that the fundamentals actually support the technicals. The forward-looking P/E of 10.68 may underestimate Smith & Wesson Holding Corp. by a long shot. Why? The company has topped estimates in each of its last four quarters, sometimes by quite a bit. SWHC has fallen in recent months anyway, but that's got more to do with political matters that are slowly dissipating. Now that it's clear the company isn't going to be drowned by aggressive legislation, investors are starting to trickle in. Better now than later.



In it to win it!!!!