What is your current posture on the VIX?
I am bullish overall, for the following reasons;
1. Market is short to medium term overbought.
2. Entering a typically bearish season for stocks.
3. Lackluster response to earnings beats, overwhelming response to downside surprises.
4. Diminishing volume on up days and increasingly high volume on sell-offs.
5. A 13 month low on implied volatility.
Deep thoughts;
Sooner or later reality has to set in, that the market has been on a 7 month joy ride trying to fill last fall's gap, courtesy of the taxpayer-injected liquidity. It is said that the market is forward-looking, 3-6 months. Does that mean we "had" a great holiday shopping season? One would think so, looking at the recent action. Personally, I think that the markets are more irrational than they ever been, leaving even the most advanced traders scratching their heads. Old TA methods seem less reliable than ever, when they are trying to track increasingly illogical price action. Bottom line-tread carefully with well-defined r/r characteristics and proper management. Don't chase the trade, let the trade come to you. That's all for today.
Disclaimer: I've only been "in the markets" for a year, so what do I know.
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You could add a few more fundamental and technical fun facts to the good list Justin gives for expecting some kind of correction. I have been a frustrated bear for two months watching the SPX live above a 1000. I am going to stick with my cautious bear trades until 1120 on the SPX, hoping to benefit from a turn.
ReplyDeleteYes, just about every TA indicator is pointing to an impending correction, I just thought I'd stick with the basics. Problem is(from a bearish standpoint), we've been breaking through resistance left and right at these supposed turning points. I guess you could make the argument that the farther the run up, the bigger the fall will be. Personally I don't see last fall's "fall" happening again, not without an outside catalyst such as a terrorist event or cataclysmic weather-related disaster. Although I do believe there's still a huge amount of skeletons in the closet when it comes to some of these banks and other financial institutions, I just don't see the "black swan" event that some doomsayers are predicting that's going to bring the market to 100 year lows.
ReplyDeleteAt least not until Dec 21st, 2012. (Jk)
ReplyDelete