"World's having a dizzying market party"
Merril Lynch - "The emerging markets are trading at a discount. We are extremely bullish on EMs". After a
500% rally in the BSE sensex over the last 4 years...hmmmm
One of the market analysts - "The party will come to an end sometime in the future, but definitely nor right now" - I thought, this one was classic, LOL.
Technically speaking, daily MACD has rolled over and has started diverging. The bollinger band on the $VIX is compressing, getting ready to release some energy. Now even if we were to make some kind of IT top here, it woudn't make it easy for bears to capitalize on it. Why ? - In one word, VOLATILITY !. No top of importance ever gets formed without some scary volatility preceding it, confusing both the bull/bear sides and leaving them on the sidelines. And then we start seeing the classic message board comments like "Cash is safe.... I am outta the market...Too risky to trade here...." et al. If volatility should start increasing here, it would also make it difficult for unidirectional trend followers to remain comfortable with their positions. My own take is the next few weeks will turn out to be a traders market and the most who will benefit will be the traders trading both ways.
If for some reason, the VIX starts falling again here, my thesis is wrong and i will start trading only the long side again. For today, i will be looking to short the S&P. I have already shorted the $BSE here, after some inspiration from Merril's comments.
Some pictures from my hike. At 14000 ft, it was tough on the lungs, but the sight was nothing short of magical.
