Snapshot Notes - August 23, 2006

http://www.sentimentrader.com/subscriber/subscriber_home.php

WEDNESDAY, AUGUST 23, 2006

PostCloseSummary

08/23/06 5:00 PM EST

Perhaps it's a reflection of the peak of the summer vacation season, but I've been hurting to find any consistent short- or intermediate-term setups lately.

My last "regular" comment was August 2nd, and since that time nothing I've looked at with an intermediate-term time frame has lead to anything particularly notable, other than a few snippets like the lowrisk.com sentiment survey and ROBO put/call ratio that I noted earlier this week.

Even in the short-term now, it's becoming very difficult to find much of anything that has me interested in risking capital. The trading has been relatively slow, and for the most part that's being reflected in the guides I watch. As such, I've been mostly standing aside and waiting for a better pitch to come along, which may actually happen soon should we see more selling pressure.

Several of our intraday guides are close to giving oversold indications, and our cumulative TICK has fully relieved its overbought condition. A few more hours of consistent selling would likely see the TICK become oversold, and if the S&P happened to remain above 1280 - 1285 at the time, I'd be interested in looking for a long-side trade.

Have a great night and we'll see you tomorrow!

ApproachingTheBell

08/23/06 3:25 PM EST

Despite the drip this afternoon, I continue to find myself lacking a clear enough edge to suggest a trade possibility. Maybe it's a reflection of the summer doldrums, but nothing I've been looking at has hinted at a high-probability setup.

We've seen some consistently large negative TICKs today, which has served to move my personal favorite short-term indicator, our cumulative TICK, out of overbought territory and back into neutral. It'd take several more hours of steady selling pressure to push them into oversold, and actually that's what I think would set up the next best opportunity.

A move down to 1280 - 1285 in the S&P cash index, should it be accompanied by oversold readings in the TICKs (and our other intraday guides), would have me interested in looking to the long side for a trade. We're about to head into a relatively consistent negative period in the last week of August before the usual pre-holiday bullish bias right before Labor Day, but seasonality is just a gentle breeze either with you or against you, and (usually) not enough of a reason for a trade in and of itself, so it would not preclude me from taking a long setup should we get one in the next day or two.

LunchtimeLull

08/23/06 12:25 PM EST

The S&P and NDX have both broken below their week-long trading range (or wedge, if you want to call it that), but it has been tepid and not real convincing so far.

I don't have a good feel either way here. There are solid reasons to point to more of a consolidation / decline, and others that are just as solid that point to a breakout and challenge of the May highs (in the S&P, anyway). During times of high neutrality, or when we have a large number of divergent indicators, I have found that more often than not we see a wide, extended trading range. And given that the next couple of weeks will see an increasing number of participants scoot out for vacation, a sustained directional move seems all the more unlikely.

I'm playing it very close to the vest today and waiting until the picture clears up some. There are times to press your bets, times to trade normally and times to just stay out until you have an edge, and the latter is what I'm feeling today.

MidMorningOutlook

08/23/06 10:25 AM EST

Good Wednesday morning...The "day of reckoning" passed yesterday without incident, something I felt might set a floor under prices this morning as pent-up buying demand released itself.

That looked OK initial, but we saw an immediate decline once the home-sales figures were released. The housing market is becoming more of a hot topic lately...the following chart shows the percentage of all blog posts that mentioned "housing slowdown" over the past six months:

I'm not going to debate the fundamental aspects of the housing market, but I did want to point out that it is becoming more of a concerns among traders, thus making each data point an important consideration.

The S&P and NDX have been trapped in a trading range for the past week, and that's what I'm watching most closely. I've been thinking that today would have the best chance of breaking outside the range one way or the other, and there are decent reasons to expect either an upside or downside resolution, so at this point I'm just waiting to see who has the most desire to push prices.

All the best,

Jason Goepfert

President and CEO

Sundial Capital Research, Inc.

Forwarding or otherwise distributing this copyrighted material is a breach of your subscriber agreement. Violators are subject to termination of their subscription with any received subscription fees forfeited. Any references to historical performance are based on data we deem to be reliable, but are based upon feeds from third parties. We do not recommend subscribers take positions based on data presented here alone, but rather incorporate it into a comprehensive investment outlook.