Option Investor
Index Wrap

Pullback to buy

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The Bottom Line -
I suggested in my week-end Index Commentary to buy a good-sized pullback. We got it into the lows of today.

I'll just cover the most active S&P 100 (OEX) and Nasdaq 100 (NDX) indexes today in a summary.

Closing index prices, a recap of market action, specific company influences and government releases are covered in the e-mailed and online OIN Newsletter, in the 'Market Wrap' section.

S&P 100 Index (OEX) - Daily chart:

I suggested buying a pullback in OEX back to the 553-552 area. And we saw a low today (Wed.) right around 551. I suggested a risk or exiting stop point at 549, and an objective to 565.

Trader sentiment took an upward jump today and bears watching but it is still well under the danger zone, which are readings above 2.

HOURLY OEX chart...

The pullback took prices back quite close to the previously broken down trendline, which should now be acting as support, assuming that the recent upside breakout was valid, which I think it was.

The chart above was from my Trader's Corner article in the OI Newsletter you will get or got by e-mail. There is more commentary with this article on the use of entry points and relatively close stops would have played out. So far at least!

Nasdaq 100 (NDX) Index - Daily:

I suggested buying a pullback to the area of the 21-day moving average, which was at 1438 coming into this week. My estimate for upside potential is to the 1495-1500 area. The suggested risk point was to 1433 initially, but I would put that up to just under 1440 for the rest of this week.

Buying calls looked look given the pullback to (actually, it dipped under) to the trendline as can be seen in the HOURLY Nasdaq 100 (NDX) chart below ...

The real obstacle that must be overcome is highlighted (around the red down arrow) on the DAILY chart of NDX below ...

The well-defined down trendline, intersecting around the high of today at 1460, is the key resistance; however, I think the next move is through this area. But, if WRONG!, we have a break even stop.

Please send any technical and Index-related questions to me at support@optioninvestor.com with 'Leigh Stevens' in the subject line; not only for answer, but also for possible use in my coming week's Trader's Corner article. Hey keep those cards and letters coming! AND ....

Good Trading Success!

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