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PeakTrader.com Economics, Portfolio Optimization, and Technical Analysis
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arthur Guest
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Posted: Sat Aug 28, 2004 9:36 am Post subject: BBH (with charts) |
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BBH (Biotech Holders index) closed at over 143 Fri and looks overbought. A large part of QQQ contains BBH stocks, which are relatively overvalued compared to SMH (Semiconductor Holders index), which is also a large part of QQQ. The first BBH chart below shows the Ultimate Oscillator (ULT) at 68.86 and pointing down, which may be negative short-term. Also, Money Flow and volume aren't strong. The second BBH chart shows BBH is 4.75 times higher than SMH (before 2000, BBH averaged around 2 times higher than SMH). The price (ULT and Aroon) and volume (PVO) oscillators may not support the high price. I tend to believe, BBH will test its 50 day MA, at over 138, which may then be a buying opportunity. So, if BBH rises to 144 early next week, I plan to buy Sep 150 or Oct 145 puts, and if it tests the 50 day MA (perhaps at 139), I'll buy Jan calls, at least for a quick trade. BBH short-term puts may be an excellent hedge for SMH long-term calls.
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