Being patient but things looking up... and down.

Those smart money OEX options traders were right again.  A week or so ago I was dwelling on how bearish the OEX options were getting based on the 10-day moving average of the OEX put/call ratio.  Well after about a 2.5% drop they are changing their tune.  They are back into neutral territory closing in on a buy signal. 

                             Chart provided courtesy of www.decisionpoint.com

Now the OEX options traders are not buy and hold folks.  They move around.  A buy or sell signal might only last a week or two so it is for the nimble.

Speaking of nimble, the current S&P 500 chart, which has closely followed the 1994 chart, appears to be closing in on the most volatile period of the year.  I believe we are entering the box now.  If this is true, you will find out how difficult is will be to be on the right side of the market for any length of time. 


                             Chart provided courtesy of www.decisionpoint.com

That initial drop in the box happened during the last couple days of September 1994, and the first few in October.  The drop was swift and deep before a quick sharp bounce.  So if this year does do a repeat of 1994, and you enter this period with either 100% G or 100% stocks funds, you will be correct then wrong, wrong then correct, etc.  It will be very tough to watch so patience and a plan is a must otherwise you will be jumping around like a crazy person.  The actual bottom in 1994 came in early December.

If you decide to "play" and move in and out, you obviously want to buy weakness and sell strength.  That's not always easy and not something you do in a trending market, but rather in an oscillating market as this would be.  You watch the overbought/oversold indicators and go against the grain. 

Who knows what will really happen, but if this is a possible blueprint for the next few weeks, it should be interesting.  Whatever does happens, it won't be as easy as I said, and it will be both rewarding and frustrating.  I don't recommend it for most but if you do "play", it will be a great learning experience, win or lose.

For those of you who are into technical analysis buy and sell signals, we recently had a very rare "Hindenburg Omen" sell signal.  I'll let you Google that one.

That's all for today.  Currently 100% G fund.  Looking for some weakness to make a short term move into stocks.  Thanks for reading.