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[arbman]

Let me tell you why the indices could not break the recent lows (more decisively) and probably they won't be able to until after the expirations either. The participants are still quite bullish from this picture about the equities, but the amount of hedging in both equities and index options is now twice as much as the call options in the dollar amounts.

The $10B put options difference this week is hedging against a possible of one trillion dollar change in the equity values for the next few weeks to a couple of months. This is excluding the short selling in the markets which is probably beyond all time high at the moment, did you see the odd lots lately?!?

I think more downside is coming in the months ahead for the price lows since the internal low must be about here, however the indices should bounce.

I expect the Fed to acknowledge that something is seriously wrong, enough for a rally, then the market can decline the first time they cut the rates since it will be fully priced in. I wonder what the dollar will do...

- kisa

Edited by kisacik, 04 August 2007 - 04:57 PM.