You do realize that there will be a nasty, nasty correction at some point, right? And you do realize that markets can trade down and sideways for years - even decades? And you do realize that no one can possibly know the future moves of the market with certainty? You do realize these historical facts, right?
this is the only one i care to pick apart. look at the dollar/eur/etc... the dollar is strong and doesn't appear to need the fed's support. furthermore, the fed is in no position to need to raise rates since inflation is falling under control. In other words, all is OK.
I do realize there will one day be another nasty correction-but it is a risk I and many others investors are willing to take. The nasdaq is up 400 points in 7 months. if you sat out anticiparing the 'big crash' you owuld have missed that. But it would take a very catestrophic even to trigger a massive selloff. The technicals would also give clues.
What I find amazing is that despite making a 3 day low intraday today, the VIX never went above the highs of the previous 2 days. What I also find amazing is that the put-call ratio has been under 1.0 every day in the last 13 days, despite the mild drop in price. Can this really be the bottom?
Rising rates may not be the concern - it the Fed has to ease then we could be in trouble - easing phases have lead to a recession about 8 times since the 1950's. I suspect the housing sector in 2007 will have a big effect - a continued increase in loan defaults will be hard to stomach.
I got similar replies when i gave my bullish case months ago Months ago i'm with Ya. Today i'm not so sure. For one thing, rates were rising from historically low levels. Any further increases will be moving us toward a level that has caused problems in the past. Finally the slowdown in building is gaining momentum and has really just begun. This sector and related is now nearly one-quarter of the economy. That's a little frightening. You may be correct, but personally it think it's wise to be very cautious with regard to anything other than intraday long positions at this time.
I agree that you can't sit out and not participate - but it doesn't have to be from the long side. And let me say this: Was there anyone, on record, who knew and said to buy at the 2003 lows, with the Dow hovering around 7800 and the Naz around 1,100? If someone knows it's a risk free proposition to go all in at such a point, and that they aren't dancing on a false bottom, they aren't a great trader or investor: They're a prophet.
One explanation I have read (John Succo at minyanville.com) is that when stock movements start to correlate because the idexes are being bought rather than individual stocks it has a muting effect on the vix. This often occurs at tops and bottoms (at bottoms people sell indiscriminately thus also increasing correlation between stocks).
http://www.nowandfutures.com/articles/20060426M3b,_repos_&_Fed_watching.html If he's right then the Fed (and central banks in world wide, China yesterday, BOJ soon, etc) is not with the longs anymore which could be problematic as falling oil and other commodity prices are also sucking liquidity out of the market. The very recent EM declines can not be helping either.
this is the only one i care to pick apart. look at the dollar/eur/etc... the dollar is strong and doesn't appear to need the fed's support. furthermore, the fed is in no position to need to raise rates since inflation is falling under control. In other words, all is OK. The reason the dollar is temporarily strong is that they have had some better than expected economic news, but the real reason is that several asian currencies are rising in value against the dollar, hence the recent intervention (which blew up in their face) so they have changed strategy and have started buying up the dollar to depreciate their currency against the dollar for their export needs. This is a short term fix, like a band aid on a wound that requires stitches. The dollar being artificially raised, thus not being the result of true market forces, has its own set of unintended consequences. I look for the dollar to fall from these levels by 3 months time.