what would cause the market to break through these prior highs.. thats what i 'm trying to figure out... of course complete irrationality is always a viable reason.. hey if people wanna own dollar denominated assets.. it can cause an extended over pricing of equities
"B waves are phonies...... sucker plays, bull traps, speculators' paradise, orgies of odd-lotter mentality or expressions of dumb institutional complacency. They often involve a focus on a narrow list of stocks, are often 'unconfirmed' by other averages, are rarely technically strong, and are virtually always doomed to complete retracement by wave C. If the analyst can easily say to himself 'There is something wrong with this market,' chances are it is a B wave." From pg. 70, Elliot Wave Principle. Notice how everyone and their kid brother are no longer asking 'if' QE3 is announced, but 'when' and 'how much'....... Mr. Seykota once opined that when everyone knows what is fueling the trend, it may be almost over. The entire world is convinced there will be QE 4EvaR......
Just remember 1) the market always has its reasons, even if completely illogical, and 2) the market can remain irrational longer than you can remain solvent. Three drivers for the bull case at this point are - a recalibration away from the disaster scenario in Europe - faith in stimulus in the event of economic stumble - the argument that, in a ZIRP (zero interest rate policy) world, equities are the only place to go
Could not have you used this argument when you did not believe the upside? Nothing has changed from then and now.
Those all sound like a great reason for it to sustain...most of the risk to me is still down.. and premium is cheap... so to me its not about which direction but which has the best payoff if right.
Nothing but the price action, which is everything. We are traders... we buy what goes up and short what goes down... the devil is in the details, of course, but that's what makes it such a great game.
Solar stocks rebounding from a very deep base... Valuations are extremely depressed due to industry overcapacity, an overall decline in oil & nat gas prices, leading to compressed profit margins. Oil & Nat gas looks more constructive, and the remaining solar companies are stronger after weak companies have been nixed or taken over. FSLR looks especially attractive with stable earnings, attractive valuation and healthy relative strength. Full commentary here...
Thanks for this idea, which I read about before the opening in your "View From The Turret". Made a small initial purchase after the bell with FSLR at 21.26, via a March 23 Call. Already ahead on the trade, which is normally a positive sign. If your thesis is correct, I'll be adding to the position later on. Looking forward to an enjoyable ride!