3 replies to this topic

[arbman]

I think the closes of at least 1% above levels are absolutely critical to prevent a big plunge by the middle of next week. By my definitions, the current trend is still down to flat, so far nothing exciting than a bounce.

RUT 788 --already above right now, otherwise 755-770 here I come...
SPX 1421 --weekly close must be above this, otherwise 1365-1385 here I come...
NDX 1777 --difficult target for the opex week, otherwise 1650-1700 minimum...
OEX 654 --it looks like it is already broken, I think it should test 625-633...

USD 84.39 --already in a downtrend, this might pull everything down with it...
GOLD 640 --in an uptrend, but it should not lead lower and stay above, otherwise deflationary forces...
WTIC 59.71 --massive sell off might result after a 2-3 day bounce actually, downside target is new lows below 51, the gold should not follow this one...

I just went over my some speculation vs investment ratios and I can absolutely tell you that the current hedging in the markets is not enough compared to what's been speculated over the past 2.5 months, we need to see some real price action to the upside to negate the downtrend argument.

Specifically, there were several spikes as much as $11B worth in outright call purchases with half the cost for the put purchases earlier in Jan and Feb, while we have seen a quite elevated weekly rate of $7B spent so far in the put purchases during this decline and almost equally high cost in the call purchases. We have heard some big cracks in the REITs and we did see the bullishness in the sentiment polls plummeting, but many are neutral and they will rush back in soon since I do not see the same huge rise in the bearishness yet to stop a downtrend...

The previous week's call purchases were actually more than last week's, so the speculation shifted toward more bearish outcome last week. You might say the conditioning is complete, but many put purchases were also from the member firms. They actually got more bearish last week. So, it seems like a decline during this expiration week might end up with a fast downtrend from here and it will not be gentle, but I generally expect a much better bounce thereafter. OTOH, a rally within a day or two from here must significantly accelerate higher, so I kept the hedges...

I am not a sentiment trader, I am simply looking at the dollar costs and the ratio of the firms to customers and try to gauge whether another big liquidation is coming or can be stopped with the current money flows. So far, I am not convinced at all...


Here's an interesting poll results;

Where Will the S&P 500 be in 30 Days?


(as of March 9, 2007)

Edited by kisacik, 13 March 2007 - 06:14 AM.

[redfoliage2]

I think the closes of at least 1% above levels are absolutely critical to prevent a big plunge by the middle of next week. By my definitions, the current trend is still down to flat, so far nothing exciting than a bounce.

RUT 788 --already above right now, otherwise 755-770 here I come...
SPX 1421 --weekly close must be above this, otherwise 1365-1385 here I come...
NDX 1777 --difficult target for the opex week, otherwise 1650-1700 minimum...
OEX 654 --it looks like it is already broken, I think it should test 625-633...

USD 84.39 --already in a downtrend, this might pull everything down with it...
GOLD 640 --in an uptrend, but it should not lead lower and stay above, otherwise deflationary forces...
WTIC 59.71 --massive sell off might result after a 2-3 day bounce actually, downside target is new lows below 51, the gold should not follow this one...

I just went over my some speculation vs investment ratios and I can absolutely tell you that the current hedging in the markets is not enough compared to what's been speculated over the past 2.5 months, we need to see some real price action to the upside to negate the downtrend argument.

Specifically, there were several spikes as much as $11B worth in outright call purchases with half the cost for the put purchases earlier in Jan and Feb, while we have seen a quite elevated weekly rate of $7B spent so far in the put purchases during this decline and almost equally high cost in the call purchases. We have heard some big cracks in the REITs and we did see the bullishness in the sentiment polls plummeting, but many are neutral and they will rush back in soon since I do not see the same huge rise in the bearishness yet to stop a downtrend...

The previous week's call purchases were actually more than last week's, so the speculation shifted toward more bearish outcome last week. You might say the conditioning is complete, but many put purchases were also from the member firms. They actually got more bearish last week. So, it seems like a decline during this expiration week might end up with a fast downtrend from here and it will not be gentle, but I generally expect a much better bounce thereafter. OTOH, a rally within a day or two from here must significantly accelerate higher, so I kept the hedges...

I am not a sentiment trader, I am simply looking at the dollar costs and the ratio of the firms to customers and try to gauge whether another big liquidation is coming or can be stopped with the current money flows. So far, I am not convinced at all...


Here's an interesting poll results;

Where Will the S&P 500 be in 30 Days?


(as of March 9, 2007)

An ABC waving down is highly likely for this correction. Currently, the wave B up is nearly done and we are just waiting for the wave C, which can be triggered up by any of of the following: 1. Yen Carry Traders unwinding; 2. Earnings warnings; 3. Unfriendly economic data. BTW, I did not see any capitulation during the wave A down.

[redfoliage2]

Adding 2 more factors may trigger up the wave C: An ABC waving down is highly likely for this correction. Currently, the wave B up is nearly done and we are just waiting for the wave C, which can be triggered up by any of of the following: 1. Yen Carry Traders unwinding; 2. Earnings warnings; 3. Unfriendly economic data. 4. the subprime lenders problem spreads out; 5. further plunge of the real estate market. BTW, I did not see any capitulation during the wave A down. BTW, I did not see any capitulation during the wave A down.

Edited by redfoliage2, 13 March 2007 - 07:11 AM.

[arbman]

Sure enough, RUT managed to stay above 788 for about 1.5 hours, the time is running out fast for the bulls more than the bears right now...