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| Stocks: Quickie III - May. 23, 2005 |
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Summary
Today/tomorrow should be about it for a while for the rally.
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The stock market enters the current week about as short-term overbought as it has been in quite a while. A good deal of this is the result of extra "juice" supplied by last week's options expiration, the first such event this year that went off with a strong positive "tilt."
The expiration is likely to add more juice today, since there were probably exercised call options where the stock that needs to be delivered against them must now be purchased. And since the bulls are out in force painting charts and the like, strength today could spill into tomorrow.
But I think this will about do it for a while. Then, the market is likely to become increasingly prone to a sell-off, as traders attempt to take some profits.
If this scenario has validity, it should show up in the market's very near-term trading patterns. If all goes per this particular script, don't be shocked if stocks have an overall week that is different and worse than the way they are beginning it.
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