what i find strange is that total P/C is 1.22, a level seen in Nov 2009 and Feb 2010. i would have expected the ratio to go thru the roof given the kind of market action we are seeing. a sign of complacency?
While I'm not sure what will happen Monday, I personally believe the markets would be somewhat irrational to continue strong declines next week. I believe we had a healthy correction in the markets, and we should continue upwards again. There are signs of economic growth everywhere, we can see that from the jobs report, increased earnings, and a weaning off of productivity (signaling the need to add more jobs).
As a trend bears are constantly testing support levels. We will hit 10,000 again, and it will be a chance to make some serious money shorting and buying puts. I'm expecting -300 pts over the period of a week
Yea 645 bill. Tarp style. http://www.bloomberg.com/apps/news?pid=20601087&sid=arkniUPeZQhw&pos=1 This is a so called lending facility. So they will unlock banks. doesn't look like it includes the 110 billion for Greece.
"Irrational" is Mr/s. Market's first name. Looking at the bigger picture: the rally from March 2009 lows. Buying volume was huge from March lows through early May, and buying volume outpaced selling volume all the way. This was the easy money off a massively oversold market. Overall volume declined after that and by the fall, selling volume on down days was outpacing buying volume on up days. Between December and January the market continued to make new highs on very light volume. There was a near-correction from late January through early February and selling volume on the down days seriously outpaced the volume of the up days. But by then market participants were well-conditioned to buy every dip, and when price touched the 200-day EMA on Feb 5th, there was bull feeding frenzy in terms of buying volume. The market then further conditioned participants to buy no matter what. Just buy, buy, buy. By mid-April even the most stubborn bears were looking to buy dips. Last week everyone who averaged up into long positions following the 2/5 pivot low experienced a major wipeout of their profits. Everyone who averaged up into long positions from either the July pivot low area, or the July breakout through previous highs, held part or all of their positions through the Jan/Feb minor trend breakdown, then started adding again on the break through highs, saw their profits nearly erased. Months of steady gains erased in a week. With stocks fairly valued based on earnings and potential economic growth, and Europe in a shambles, there doesn't seem to be a rational reason for the market to rise much beyond this level. Other than participants playing the oversold levels in case by some irrational chance Europe makes an announcement: "I'm not dead. I'm getting better. I feel happy! I feel happy!" and then of course we retest highs. The wisest traders tell you not to fight the trend and that trying to predict tops and bottoms is a fruitless and expensive exercise and it's true. We all felt a pullback was coming and you had the choice of shorting the market hit or miss in and out until you finally catch the pullback, averaging down in the hopes of retracement, or waiting for some early confirmation, such as the lower high off the top between 4/30 and 5/3. But you're still at risk fighting the trend without a strong short signal. Then today, I seemed to remember something, in the back of my mind, a comment Shortie made. I scanned his April posts around the time of new highs and I found it. Shortie provided one of the earliest possible short signals, placing you in a short position just a few hairs from the top. The comment was amusing at the time, but now, set in the framework of the past week, it was frighteningly foreboding: 04-20-10 01:21 PM "i should add that this is my optimistic projection. i don't believe this market will ever go down. maybe in 2011."
None know. It seems though that the ECB will arrange for the Germans and IMF to assist in a major way with credit and that a substantial bailout is more likely than the EU collapsing. When the announcement is made, if it is, and it could come at any time, i imagine we will see a nice bounce. That would probably be sold, at least the first time up. Some are thinking this is the start of a double dip and i find myself in that camp. Therefore I think the most likely scenario is a bounce that could develop considerable momentum with short covering if it's set off by an ECB announcement of a resolution, and then eventually I anticipate we would wend our way down to the 970-1050 area and hold for awhile, possibly until late Summer. We could even proceed more or less directly down before the first bounce depending on how long it takes the EU to negotiate a fix. I would anticipate that with a US election scheduled for November that this Fall is likely to break from the usual mould and give us some rallies into November. A higher dollar will reduce crude prices and perhaps gasoline at the pump. Never a bad thing for the party in power. I suppose I am sounding cynical here. We shall see, won't we! I imagine there are some in the more Northern latitudes of the EU that are regretting their embrace of those at more Southerly latitudes. Continued selling on increasingly lighter volume followed by massive volume but little further progress down will be a warning to those who may be massively short.
Private (bank) debt has now been swapped for sovereign (government/central bank) debt. The whole f'king house of cards is going to collapse just a matter of time....all the actions are just delaying the inevitable. USA $10T debt and climbing is unsustainable....need to add the USA to PIGS list = PIGSUSA