Option Investor
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It's not all gloom!

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Most of my alerts have come to the downside this morning, but one stock I've been writing about in the past week is making a move. It was a place I felt "bullish traders" could focus with the market uncertainty we've been seeing.

Seitel Inc - 60-minute chart.

I'll trade any stock I think I can make money in. Last week we liked the Oil Service Index (OSX.X) and many of the ties that Seitel (NYSE:SEI) has with the group. Traders than can find similar technicals in other stocks may do well to the long side.

Oil Service Index Chart - 60-minute interval.

I like to correlate my stock trades with a corresponding index. On January 30th at 09:30 EST (IndexSkybox.com) then again at 01:30 EST (OptionInvestor.com), I thought the Oil Service Index (OSX.X) looked attractive for bullish traders to trade. So far so good and our bullish target still looks achievable at 139. For short- term traders they might make an association with SEI at $18 and the OSX.X at 139. Time will tell, but this is one way to set up trades and establish short-term targets.

Semiconductor Index Chart - 60-minute interval.

This morning, the SOX.X opened lower, and then right when it hit the 625 level it bounced like a rubber ball to 646 or our downward trend. It would take a move above yesterday's high of 661.44 to really get me thinking there was something more that some short-covering taking place. The reason I "think" this is that I'm not seeing some of the stronger technology indexes like the Disk Drive Index (DDX.X) put on any type of upward move. If the "stronger" indexes aren't moving, that usually hints to me that what I'm seeing is short covering. If I start seeing some strength in a strong technology sector, then I'll start to think there is a rally underway. It will eventually happen, but I don't think its happening right now.

Networking index Chart - 60-minute interval.

No signs of short covering in the NWX.X. This index continues its decline and has gone through the lower end of our channel like a hot knife through butter. Next level of support would be the January 3rd low of 651, but his would be an area to only look for a bounce and not a "great buying opportunity."

Jeff Bailey
Staff Analyst
www.indexskybox.com
www.OptionInvestor.com

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