Securities Research Services

Tuesday, March 27, 2007

Dip Buying is a Good Strategy Here

For the fourth week now we are seeing put call ratios in the 2-1 area where almost twice as many puts are being purchased as calls. Being in the camp that is contrarily positioned against the overly bearish crowd is appealing to us. If we were in agreement with the crowd here we would be a bit nervous, but these bearish readings are quite bullish here so we are comfortable in our position of being cautiously bullish.

Even so, the market is in a trading range and is overbought technically. Dip buying has been healthy and bearish sentiment should keep a floor under the market. Until we see a breakout it is best to stay cautious, accumulating a small position on dips but saving some powder for when there is confirmation.

1 comment:

wez said...

i have bought dow for 12400 and the target is 12480. regard.