That Sucking Sound

I have been harping on options expiration as the low end for the current oversold rally for weeks  now. While the rally has now done the minimum, it seems to me this market still has some bears to suck over to the bull camp. While participants are no longer as bearish as they were two weeks ago they are still doubtful of this rally.

The market might need a rest before a resumption of the rally as the S&P 500 has shot up by 70 points in a relatively short amount of time. It would not be surprising to see some sort of pullback following option expiration better known as the expiration hangover. That would likely lead to a rally through the turn of the month.

I believe the market will work its way lower by the Fall as the extent of the slowdown becomes apparent. But the market has fallen by 15% and is now having an oversold rally. Bears are probably better off looking for a top after the July 4 weekend, although a top before that is not out of the question.

6 comments:

Anonymous said...

Does it matter any that Cramer feels the same way?


A Cap on the Upside
7:07 AM EDT
I've run through the market, and unless I'm missing something big, this move has 2% left -- tops.

Anonymous said...

Nas is up 6 days in a row. Going for 7.

Tsachy Mishal said...

Cramer still sounds bearish to me. That adds credence to the argument that the market needs to go higher.

Anonymous said...

Not today, everyone is looking for the quadruple witching squeeze higher. Adding to shorts, will cover before lunch one way or the other...

JD

Tsachy Mishal said...

In the short run I am weary of a pullback as I outlined in my opener. However, I think a better risk/reward short opportunity would emerge if a rally sucked more bears like Cramer to the bull side.

Anonymous said...

Lunch is served. Holding on to just a small short for now.

We broke and closed above the 200 day moving average on Tuesday. The fact that we are approaching three full trading days without extending more than 1% above or below that level is interesting. Not sure what to make of it.

JD