While I do think a correction is in order, I don't think it will be for several months at least, unless the Russia situation gets much worse. My reasoning for this is that like everyone knows, the market preforms as well as everyone believes its going to preform well. Like you said, everyone is confident of new highs, so more money flow is going in and for the short term we definitely will keep seeing new highs. A good example of how bullish the market is is that although the whole Ukraine situation was going down and Russia so far has basically sent troops into an old Soviet territory, there was only a slight sell off. This is because confidence is so high, even something totally unexpected like Russia annexing Crimea has only caused a little confidence to be shaken. Short term, I believe it is stable. Way to hard to predict for how long, but a correction in 2015 or late 2014 is definable not out of the cards.
The CNN Fear/Greed Index is now hitting 50, neutral reading after todays (as of 3pm) 230 dow loss after failing to hit new highs this week. Last week the CNN fear/greed index was at 80+. VIX is about 16 right now. It will be interesting to see what the market does from here and see if the market yet again will condition everyone to buy these big down days and not be fearful of them . I want to see how quick VIX drops and by how much on any big bounce up tommorrow or late today near the close. I have many basic indicators all diverge this week on the daily time frame and I bet many others are noticing these divergences (Typical MACD, RSI , NH-NL index, etc). The problem of course is these divergences happened so many times in the past few years , so perhaps its good for only a short amount of time.
A market correction is seeming necessary these days. There seems to be too much disparity in the news to be sustainable long term. Household wealth is reaching record levels but at the same time the number of people who are living paycheck to paycheck is also at a record high. Something doesnât add up.
The Reserve Bank of India's (RBI) Deputy Governor Kamalesh Chandra Chakrabarty has submitted his resignation because of personal reasons, the RBI's spokeswoman said on Thursday. Is there any other issues that were not disclosed, there is something else behind the scene. Resignation at the time of year ending? seems doubtful to me.
I say up. Gold prices are going to go up as long as the general value of U.S. currency keeps decreasing. As long as the Fed continues to print money, this seems like a reasonably safe bet. Plus, if the market begins to show signs of weakness in 2014, GLD will go up.
Till now Its a breeze, market looking forward to maintain its rally. Last night studied the price patterns and charts. All the multibaggers and Mid caps are more or less in the same flow. Just as have a look at this scrip: TECH MAHINDRA SPOT-
In fact the opposite is true. Investors express bullish views <i>after</i> they have bought, so extreme bullish sentiment means almost the entire market is long.. so in fact there are very few potential buyers. Even small amounts of selling can trigger an avalanche.
I think this is where I am trying to get to. I I have a wish list, this "wish" list is something I think would be useful in 1) . sentiment 2.) actual dollars committed to stocks 3) number of people invested. I think getting all 3 of these pieces of information, hopefully in a very timely fashion , will be useful to track over time and then see when extremes on both sides are happening. 1) . Sentiment - AAII / Bull/Bear of investors survey. Anything else , please add feel free to add if you think it add to sentiment indicator. 2). Dollars committed- How to find actual dollars that moved to stocks from safe investments - saving/money market etc? This includes moving to Long side stock mutual funds from money market or bonds. EDIT - Perhaps even knowing where they moved there money to, for example , buying "penny" stocks /microcap stocks, as I would think that the general late to party public would probably help propel the last leg of high flying small stocks as they hear of others getting huge 100% returns in short time. 3) . Number of people investing - How to find the number of people who now have broker accounts , or mutual fund accounts, include 401k. I believe, if there are way to get this information, would be useful to track. My belief is that once dollars are committed to stock, only then emotions and opinions matter. The actual event of buying or selling is the sentiment revealing itself. I think this will be useful , but need your help in how and where I can get even samples of this (ie. using just a large public broker as a sample) kind of information so I can try to put it all together and track over time. Thanks
I have been looking for the sentiment indicators that I have outlined for myself in my prior post. I think I have found something that could be used as a decent proxy for my requirements of actual dollars committed, not just opinions of bulls/bears. Below is attached a chart that I hope makes sense. I first seen this from a stocktwits post from Andrew Thrasher CMT that came close to what I was looking for. He had stockcharts.com of Rydex funds and its ratios. The bottom chart is the Cash in Money market balance. Notice how it rose during many selloffs, but lately barely rises in the face of some good size selloffs in Nasdaq stocks recently. Also the bulls assets committed did not sell off or go bearish during recent selloffs like it used to (I posted 1 year chart, but 2 year chart shows a quick reaction to be bearish on any down move in SPY in both both measures of a rise in cash and a decrease in amount of bullish funds. So what am I looking for in this information? I guess I am confirming what I feel in my gut after watching each tick(seemingly) of the markets for years on end now, day after day. That participants have become bullish, confidently bullish, not just in opinion , but in actual dollars committed to that opinion, which I find way more important. They are not scaring out easily like before and that is different personality trait that I havent seen in many years. Combining this with a VIX that is very low, quick to sell off on up days. I can at least watch these indicators to gauge extremes, to see when public had waded further and further into the deep end, and then have the confidence to know that when do do finally scare out, it will have to be more than the 5-8% corrections we had recently. I would like your opinion on what you think .