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End-of-Year Rally?

 
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PostPosted: Sun Oct 26, 2008 7:59 am    Post subject: End-of-Year Rally? Reply with quote

The SPX daily chart shows the 839 low was tested on lower volume, which is bullish. Other bullish indications include: The U.S. stock market outperformed Western European stock markets Friday; the NYMO 20 and 50 day MAs are at or near intermediate-term bottoms; the SPX weekly RSI remains severely oversold below 20; the U.S. Dollar weekly RSI is severely overbought above 78; VIX reached 89 1/2 intraday Friday; and Warren Buffett is bullish. The SPX daily MACD created a bearish kiss about a week ago, reflecting the recent decline.

SPX may test the 2002 bear market low at 775. However, it may be best to take advantage of volatility buying SPY Dec 85 to 90 calls on pullbacks, and sell some on over two point bounces to lower average cost, while keeping some for potentially much larger gains, e.g. SPX 1,200. The first estimate of third quarter GDP will be reported Thursday, and the stock market may rally on the news, whether it's better or worse than expected.

Top Buys: SPY AA FCX C BAC YHOO DNDN

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