Michael Metz, seemed, if I remember right, he was a permabear...saw him on cnbc the other day...a bull...oh, well, stranger things have happened...
yeah...the low vix might not indicate a top, but maybe a breather would be in place...and we're coming into a possible weaker time of the year...the fall...then again...maybe not sure makes things interesting, though...
Think about it. Corporate bond managers are bullish, as they have been for quite some time, save the major scare the GM debt downgrade gave them. The market stared into the abyss on that one and came roaring back. GM couldn't torpedo the corporate paper market, which further emboldened institutional managers. They are aggressively buying up any deals brought to market. Spreads over treasuries for junk-rated companies are very tight. You have companies who normally wouldn't be able to tap these markets, or only at very high rates, able to raise a lot of cash at very attractive rates. So companies are raising hoards of cash while it's available to them. What are they doing with it? They are buying other companies or buying back their own stock. And not in trivial amounts either. When 100's of BILLIONS of dollars worth of stock is removed from the marketplace simple supply and demand dictates higher prices. And don't forget, the market continues to attract net inflows of cash. Add the perpetual "money on the sidelines" cliche (which btw if it is on the sidelines, is now underperforming the market and is forced to chase) and you have a lot of capital looking for a home and the pool of available assets is shrinking. The market will of course continue to vacillate and gyrate, but the structural shift outlined above points to higher prices unless something happens to make the corporate debt market come unglued and turn off the cheap money tap.
Never said it can't go up. But it is not a bull market with conviction and volume. S&P chopped most of 2004 and 2005. S&P was down most of 2005 so far. I think it's mostly short covers keeping it up. Now if the cash on the sidelines starts coming in, that would awesome.
Anyone know what's up with that random spike in the NYSE Composite today between 2:00pm and 2:30pm EST? Is my data wrong? I also get a long upper wick on the NYSE Composite daily chart from another source, thereby corroborating this anomaly. Ironically, this spike to the upside puts the NYSE at the upper bound of the channel that it currently resides in, which corresponds today to an upper-bound touch of the S&P-100, as well as a weakly-defined upper-bound touch from the Nasdaq Composite. The Nasdaq Composite high today does seem quite close to the high achieved at the end of 2004/first trading day of 2005. Is this perhaps a confluence of resistance indicating a possible low risk entry for a reversal to the downside? Or, alternatively (the less likely scenario it would seem), do we break out above these semi-significant resistance points and rally like crazy tommorow? Many people are bullish from here - we have come a nice way since the lows earlier in the year. Is this a possible contrarian short signal? However, the major upper bound of the diagonal (yet to be determined as ending or leading) on the S&P-500 has not been reached, yet - not that we HAVE to reach it to find a longer-term bearish scenario, and perhaps to bounce off of it it again would be suspicious on the bear side, longer term (i.e. leading diagonal; translation: bubble - once again moving significantly past the rough long term estimate of 10% annual equities market growth). More significant it seems, in the short term (should a reversal from here occur), is the lower support channel on the S&P-100, starting with the late October 2004 low - oh so clean, and touched numerous times already! And yet, the rate of growth defined by this trendline is close to the magic 10% number - approaching long term rationality.. It just seems risky to open new long positions or add significantly to existing long positions at these price levels (without stop losses at least!) Let's see who wins from where we are now - bulls or bears. I 'predict' the bears will win for at least a little bit from here, but as we all (should) know, the predictions mean squat - the market is always right. I hate putting my neck out like this but the bulls are relentless it seems! I hope this helps someone make money, or not lose it. But having said that, don't listen to me, do your own analysis, and define your own risk. One interesting scenario would be a pull-back from here, later leading to a slow net move to the upside for the remainder of 2005 (to maintain the year XXX5 perfect record of positive stock market gains!) followed by some nice longer term downside with increased volatility. Good trading to all. -ei
This market is about to blow out here fast when that money starts piling in. I think we going to see bonds selling off pretty good and that money will go to stocks also. People have been waiting for 4 years for the markets to crater and guess what? It ain't going nowhere but up. Once all the money on the sidelines realize this they will get scared that they are being left out and are going to jump in quickly. John