Snapshot Notes - August 24, 2006

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THURSDAY, AUGUST 24, 2006

PostCloseSummary

08/24/06 5:00 PM EST

Over the past couple of days, our intraday indicators had been working off their overbought conditions and were actually on their way to setting up what should have been a low-risk setup to the long side with a bit more selling pressure.

On Tuesday afternoon we got a late-day rally that interrupted the setup, and again today the downside was halted prematurely. With the drifty action, our most sensitive guides aren't reflecting any extremes, and it's difficult to find a setup that seems worthy of risking any capital.

This is the kind of action we're probably going to see most days for the next couple of weeks as more and more traders filter out to enjoy the last vestiges of the summer vacation season. It'll likely make it difficult to find many interesting setups, but pressing bets in this kind of environment is low-reward stuff and I try to avoid it.

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

ApproachingTheBell

08/24/06 3:25 PM EST

Compressed intraday ranges and lackadaisical trade are what we need to expect for most of the next couple of weeks, and today is proving to be a stellar example of such.

I have been looking for a move lower that is sustained enough to push our more sensitive guides closer to oversold territory in order to set up what I thought would be a good trade to the long side, but so far we're not getting the chance. I don't think we're going to run away to the upside during the next couple of weeks, so I'm not terribly worried about missing a galloping breakout any time soon, but after last week's persistent rally the first good whack lower should provide a low-risk opportunity to play the bounce that should come as those who missed the move try to scramble and get in. Identifying a low-risk, high-probability entry to test that theory is the trick, and so far I'm still not seeing it.

LunchtimeLull

08/24/06 12:25 PM EST

The major indexes have been gently but persistently selling off from their opening gaps, reinforcing the idea that I don't want to be chasing prices in this kind of a market.

The spurt higher yesterday afternoon and subsequent sell-off has left our most sensitive guides twisting in neutral territory - we need a move that last longer than a couple of hours to get them pushed into one extreme or another. I'm still looking for the possibility of the S&P holding 1280 - 1285ish while our guides become oversold to set up a potential long trade.

MidMorningOutlook

08/24/06 10:25 AM EST

Good Thursday morning...For the first time in 14 weeks, the latest AAII sentiment survey of individual investors showed more bullish respondents than bearish (though just barely, at 39% bulls and 37% bears). As mentioned previously, that 14-week string is the 2nd-longest in the 20-year history of the survey, other than a 26-week trail of apathy that ended in January 1991.

In the short-term, I had been looking for a potential long trade if we would happen to get a few more hours of selling pressure that put our intraday guides into a more constructive condition while the S&P remained above 1280 - 1285ish. The late spurt yesterday afternoon ruined the chances of that happening anytime soon, and I'm not willing to chase prices in this kind of market. I don't find anything high-odds about the current setup from either the long or short side, and am standing aside until something better comes along.

All the best,

Jason Goepfert

President and CEO

Sundial Capital Research, Inc.

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