A Few Thoughts Before the Open:
- The Dow Jones Industrial Average closed Friday at 12,479.73 Despite Friday’s move higher, the chart continues to show weakness. I think it is possible we could see it test its 40 day moving average, currently at 12,350.52 within the next few days. Absent a concrete deal on the debt ceiling within the next few days, I continue to think the Dow Jones Industrial Average will test 11,934.58
- Last Friday was options’ expiration. It is not uncommon to see a brief, temporary trend reversal on options expiration day as traders unwind their positions.
- The S&P Banking Index ‘BIX, and the KBW Banking Index ‘BKX’ both look weak and on the verge of setting new yearly lows.
- The Dow Jones Transportation Index closed Friday at 5,342.54, basically on its 40 day moving average. I am seeing continued weakness and expect it to test 5,060.59
- The Morgan Stanley Healthcare Providers Index ‘RXP’, the S&P Healthcare Index ‘HCX’, and the Amex Pharmaceuticals Index ‘DRG’ all basically closed on their 40 day moving average. I consider this to be a sign of weakness.
- All the various technology sector indices are showing weakness.
I am going to be looking for stocks showing weakness to short and write puts against.