Earnings are next week. Stochastic indicators signal an overbought market, and the path of least resistance is down. It will probably take a few sub par earnings to get the ball rolling to S&P 1100 and lower.
I put the odds at 75% that the S&P is below 1100 within two weeks. I say this confidently as earnings approach and with extreme market complacency. It's always been my motto that I would make a large bet on any event with a 51% or greater probability of me winning. So at 75%, I'm in great shape here to make alot of money. I'd love to hear what others on this trading website think of this specific trade . Thanks!
Ive been saying for a while we would hit the 1140 area and then decline 3% - 5%. Like you, I will put the odds of that at 75%. Now, my bigger concern is that I'm actually seeing some signs of a potential double dip recession. Particularly, a recession driven by depressed consumer spending and additional housing price declines. I think there is a real possibility that we get more significant declines, particularly if we see poor guidance from some of the co's during earnings, and if we see continued bad trends in economic data. I'd put the chance of a more severe decline at 25% (of the 75%)... Right now, my plan is to let the markets decline over the net 2 -3 weeks, and then get long on a reversal day. However, depending on how bleak things look, I may wait or at least significantly hedge my positions. I think there is very little chance (<5%) that we head farther up near term...certainly i don't see any chance we cross 1200 in Q1.
Just read this thread. plasticman, I like your insights! Nice call! wish I'd seen this two weeks ago.
are you selling calls or shorting outright? selling calls into Feb expiration is very tempting but maybe march is safer.
Both. As mentioned in this thread, The march 1200 calls earlier in the week were @ $10 and higher. The Feb 1200 calls also a good sale and closed @ $2. Anyone else have a position that relates? This is a trading website so there should be traders on here with current positions.
Does anyone notice how the markets move higher in the morning hours, get the push upwards of .50-.75% and just drift higher into the close. There is little or no pullback what so ever. There isn't any volatility at all on these moves higher. How long this goes on for is anyone's guess, but with this type of manipulation any correction moving forward will just be even more significant as the markets haven't cooled off one bit since March 2009.