MARKET ANALYSIS

Bulls win an early trade dispute to finish Monday's session in higher ground and make it seven in a row. For the two day period the S&P500 (SPY) is up an additional 0.47% as green shoots efforts or worried climbing keep market bulls smiling in September.

Key highlights for buying a little something during the two day period:

• FedEx (FDX) delivers special upside guidance package on Friday.
• Goldie raise of oil and gas giant Schlumberger (SLB).
• Momentum and bulls pay tribute to fallen of 9/11 as market finishes squarely where it was eight years ago.
• Deutsche Telecom (DT) interest in Sprint (S) keeps it a second "Merger Monday" in a row for bulls.
• China's investment arm sizing up stake in global grid / utilities provider AES (AES).

Key highlights for schnitzeling a little something during the latest rally to fresh highs:

• US imposes tariff on tire imports from China.
• China Strikes back with anti-dumping investigation of US chicken product and vehicle imports.
• "Fearful" bulls worried of missing out put VIX at YTD lows and Bollinger test.
• "Never sell a dull market?"
• See "Market Snapshot" below.

Market Snapshot


Figure 1: S&P500 (SPY) Weekly Inverse H & S or "W?"

I'm personally not seeing what all the hype is about. Of course, the now seven days of higher highs doesn't elude me. Whether the price action has been the result of green shoots or investors climbing a wall of worry being responsible for the market's defiantly bullish behavior, I'm not sure. Personally, I am inclined to think its equal parts of both, depending on the day.

More important to this strategist, which mind you has been awed of the latest move and mostly on the sidelines, tenacious trends, much like the less robust variety, do end and typically with more of "Wow! What were we thinking?" factor. Coupled with the bulleted points below that emphasize caution, it wouldn't be a complete surprise to find out this time is no different.

The following factors and anecdotal evidence might be considered relevant in determining a suitable, limited-risk strategy in the coming days and weeks ahead.

MARKET LAB

Bullish Technicals

• Breakout of daily / weekly downtrend from Sept 2008 highs DIA.
• Weekly Inverse H & S being breakout from October lows. "MM" of 113 - 120.

Bearish Technicals

• Potential W5 Daily and W4 Weekly in SPY.
• 1930 Bear Market Rally repeat and "W" pattern SPY?
• Weak calendar months of September and October.
• Larger minimum correction zone of 94 - 96 given historic magnitude of rally.
• Consistent weekly breakouts suspect.
• Six Day "Higher High" bubble top SPY. Short-term overbought conditions.
• Bollinger and YTD test in VIX.
• Lehman anniversary. We've learned so much. Guy Adami says "Do Your Homework."

RADAR WATCH

A whittled down radar remains on the down-low as successful and consistent breakouts and breakdowns remain a less than consistent affair. Overbought conditions in Mr. Market but a refusal to go lower has little to offer directional bulls or bears looking to enter afresh. Traders need only look at what the three existing profiled names from the Bulls Radar have done in recent days and weeks in order to better appreciate a trend which begs folks to keep the powder dry.

RADAR SCREEN

The following optionable stocks look to have a combination of technicals and fundamentals that might warrant further investigation based on a trader's own methodology and risk acceptance. The list is not a recommendation and is intended for educational purposes only.

The Bulls

Table 1: Bull Watch list

Non-Directional

Table 2: Basing Watch list

The Bears

Table 3: Bear Watch list

Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler's observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.