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From The Trading Turret
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From: R.A. Christy
Editor, ‘From the Trading Turret’
President/CEO, Christy Investment Group
http://www.christyinvestments.com
Date: August 9, 2007
Current Field Position:
DEFENSE
Bullish Percent NYSE: Os @ 48%
Bullish Percent OTC: Os @ 44%
Bullish Percent Option: Xs @ 48%
Today’s diatribe …
A crisis in Chinese is a combination of
two realities:
(1) danger (top symbol) and (2)
opportunity (bottom symbol)
I’ve used this symbol from time to time
over the past 25 years. It’s a very good reminder of where we are today
in the market. The headlines remind us everyday that we’ve only seen the
tip of the iceberg on the mortgage mess. To make matters worse, members
of Congress have started the posturing which means that hearings are on
the way. And with the election season now on the horizon, you can bet
your bottom dollar that many if not all of the candidates will have this
as part of their platforms. Personal responsibility can’t be a factor
especially during an election year.
As many know, I don’t have a lot of faith
in Congress. Instead of pandering to the masses on this matter, they
should do something important like investigate steroid usage in
professional wrestling.
As for the market - subprime ooze and
hedge fund woes bombed the market today and the result was the worst one
day decline since 2002.
I heard someone
say that the fear was feeding on itself. Pretty concise – I’d say. The
Dow Jones Industrial Average fell 387 points and the S&P 500 slid 3
percent, their worst declines since a Feb. 27 drop spurred by a sell-off
in China. A gauge of stock market volatility rose to a four-year high.
About 2.8
billion shares changed hands on the New York Stock Exchange, the most
since July 2002. All 10 industry groups in the S&P 500 dropped more than
2 percent today.
The Chicago
Board Options Exchange Volatility Index gained 24 percent to 26.48, its
highest reading since April 2003. Larger readings in the so-called VIX,
derived from prices paid for S&P 500 options, indicate traders expect
bigger share-price swings in the next 30 days.
The daily bloodletting is getting old and
“pity the fool” who isn’t up to speed on this sub-prime mess. Mark my
words – serious heads are gonna roll once all this crap makes the light
of day.
So – what’s next?
The NYSE High Low Index is one of the
short term indexes that I use to keep an eye on the risk levels in the
market. The indicator which measures the percentage of new highs to new
lows has reached an unusually low level. So low in fact, that we have
only seen this level 15 times in the past 27 years. The market isn’t
just oversold, it’s totally washed out.
What this tells me is that the market is
pretty ripe for a bounce. Once this indicator turns, it will be a good
time to load the boat with some new positions.
On the sector front, the average reading
this week in the sector bell curve is 40.39%. This is a pretty good
shift to the left and it’s giving us readings that we haven’t seen since
March 2003.
Several sectors are stirring and showing
signs of life. They are Gaming, Real Estate, Finance and Insurance.
Favored sectors include Oil, Oil Service, Software, Protection Safety
Equipment and Software.
Since we’re still on defense, we’re
holding tight until the indicators give us a green light. If you’d like
to see the sector bell curve up close, just send me an email and I’ll
send you the chart.
Another sector showing signs of life is
Wall Street. Given all of the bad news surrounding the mortgage debt
crisis, just about everyone in this sector has been tainted and taken to
the woodshed. Since Wall Street is nothing but extremes (either too good
or too awful), a number of big time opportunities could show up soon.
For now, I’m sitting tight and keeping my
eyes on the stops. When one is triggered, I’m moving the proceeds into
money market. I’m also using this time to work on my “watch list”. These
are names that I want to own when the buy signals come back.
RA Christy
The Stock Trading
Advisor
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R.A. Christy is a professional stock
trader, money manager and author. Mr. Christy is the President CEO of
Christy Investment Group, Ltd., a registered investment advisory firm.
He is also the Managing Partner and Portfolio Manager of Plato Advisors,
LLC. At the time of publication, Mr. Christy may from time to time write
about stocks in which he, Christy Investment Group Ltd or Plato Advisors
LLC has a position. In such cases, appropriate disclosure is made.
Under no circumstances does the information in this column represent a
specific recommendation to buy or sell stocks. Mr. Christy appreciates
your feedback and invites you to send it to
rac@christyinvestments.com.
The Stock Trading Advisor
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© Copyright 2007 RA Christy
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