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The day before the market bottomed last week, I noted in my previous post that the 3-week sell-off following the release of QE2 was coming to and end and that we would rally to new highs. That Apple (NASDAQ:AAPL) would see all time highs by this week and that we would likely see significant inflows into equities over the next several weeks.

As an update to that assessment I wanted to point out that a lot of signs are pointing to a weak Tuesday, Wednesday and maybe Thursday. We could have a relatively steep sell-off this week. Yet, that sell-off, if it does happen, is a major buying opportunity. It's a buyable dip.

The CBOE put-to-call ratio ($CPC), $VIX and QQQQ channel trend are all signaling lower closes ahead. Yet, this all goes out the window if the S&P 500 breaks out to new highs, if the $VIX closes in the red or if the $CPC closes above 80. The signals are invalidated on any of these situations. At this point, it's worth mentioning as a concern.

The strategy I'm employing going into the next several days is buying at the lower trend line on the QQQQ or on a breakout above $54. We are sitting at an uncertain range right here. Waiting for a breakout or sell-off to add to my long position.

Disclosure: Long QQQQ

Source: December Rally Update