Start Scaling Into Long Positions!

September 30, 2011
Author: Peter Stolcers, Founder of OneOption
Author
Pete

I have to keep comments brief. This feels like liquidation!!

Some hedge funds must be in trouble and they are dumping everything they have. That includes some of the strongest stocks in the market. That is a typical sign that we are reaching a capitulation low.

Greece will get its money, Germany voted to expand the EFSF and economic statistics are improving (durable goods, Chicago PMI, initial claims). With earnings season approaching, I feel the bid will grow.

Yesterday’s last minute market surge tells me that buyers are anxious to get in. Sell put spreads and buy calls on some of the strongest stocks (those at the top of the Live Update table). Expect to take some heat next week.
If the economic releases come out good, we are off to the races. The expectations are low and any surprise will be to the upside.

China will release PMI tonight and I don’t believe conditions have fallen off a cliff. The number will be just below 50.

Start scaling into long positions. I believe we will finish on the plus side today.

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