Securities Research Services

Monday, May 15, 2006

Near Term Bounce is Due Early This Week

Options expire this week and traders are overweight on the short side so we would expect a pretty good floor to be in place this week. In fact, last week's heavy selling could snap back into a decent two or three day countertrend rally. We recommend using this rally to exit poorly performing stocks and for putting together your list of shorts. Last Friday's follow through selling appears to us to be overdone, but since we didn't get a late day bounce, set ups on either the long or short side are risky here. We recommend managing open positions today and taking a wait and see approach to the market as we begin the week.

No comments: