Historically, it's an up day, 29 years in a row I read somewhere. IMCL is a falling knife, here's a holiday idea:
The House of Cards
The house of cards has been built over the past four months in the market. If you had been watching the open interest in the S&P futures you would have know that on the low week in September the open interest was 499,170 contracts with a closing price of 977. Open interest expand to 561,312 contracts with the price closing at 1140 on the week of December 3, 2001. So what you see is an expansion of open interest with the price climbing and that is bullish to that price level (1140).
Now if we have continued rally from that point it is important to keep open interest constant or expanding. Contracting open interest with a price rally is bearish. Open interest ended the week of December 31, 2001 at 498,484 at a price level of 1159.30. This means over the past month the market has been churning itself sideways and building a base for another advance. So as we rally over the first two weeks of January we will see if we get an expansion of open interest and if we do not you can look for a very week February.
NASDQ Open Interest
I’m not going into a big explanation of open interest in NASDQ Futures but I will put the numbers up and you can figure it out. September 24, 2001 Open interest was 48,131 @ a closing price of 1137.00 December 17, 2001 Open interest was 79,015 @ a closing price of 1612.50 December 31, 2001 Open interest was 47,418 @ a closing price of 1624.00
alexandergrace: One curious event that has not taken place was the turning up of monthly momentum models on the NASDQ and S&P futures this is surprising to me but it is what it is and it is not good. So what we have had is a bear market rally for a period of months and until these models cross and turn up tend to make this market reminiscent of the 1932 Dow Jones stock market. Now we have not had 3 down years in a row since the 1939-1941 period in the stock market. That stock market had just come through the great depression and was rescued by World War II. Is it likely the we have 3
alexandergrace: straight down years? I don’t think so but the old pattern of getting out of the way in February in upon us. We just have gone through the best season in the market and the upside here is not big at this point. Now when I think about valuation in the market the same theme comes to mind it is too expensive in many industry groups. So should I be buying over valued technology stocks I don’t think so. Guess what the only cheap group continues to be energy.
alexandergrace: www.TradingConcepts.net WEEKEND EDITION 1-7-02
imho, Jerome
