12 replies to this topic

[denleo]

NASDAQ is kind enough for me to rally on negative breadth and rising volatility. I continue to add bearish options strategies with a time horizon of 1 to 3 months or longer with every up tick. They should give me more upticks into the FED. No short-term trades. Denleo

[arbman]

This market started to look really rotten, doesn't it? I still believe that there will be another rally in Nov, but the risk increased to a point that the long exposure must be limited until we see at least a better bottom or breadth expansion at this juncture. I also built some bearish positions for the remainder of the week... Good luck... - kisa

[airedale88]

IMO, the short term so so breadth is institutions house cleaning out the under performers before they start their early christmas shopping.

[denleo]

IMO, the short term so so breadth is institutions house cleaning out the under performers before they start their early christmas shopping.

Airedale, IMO a short-term so-so rally is a part of institutions positioning for a bear market. I am one of them.

Denleo

[NAV]

Do not forget that tommorow is the Fed day and it's perfectly reasonable to see not so good breadth. The tug-of-war should show up as a small change day on the NYSE MCO today. That's the calm before the storm. Do you guys remember how crummy the market action was prior to the last Fed day ? I do agree with Kisa though, that any further extension of rally would need a breadth thrust. But that could come post-fed decision.

[arbman]

I hope we are not going to get the entire "Christmas rally" again in 2 hours after the Fed decision.

[ogm]

Don't know about the bear market and the mother of all tops, but one thing is certain... There is absolutely no urgency for insitutions to buy stocks here. Stocks aren't very expensive, but estimates are coming down. I think in light of high levels of bearishness we won't get a huge decline, probably just a lot of sideways chop for a few month with high anxiety, high stress and volatility. Market is now very selective. You can't even point to any specific sector going in one direction. Because even within sectyors some stocks are trending up some down. Big mess. Hard to pick stocks here. I think we need another washout.

[arbman]

ogm, I am not sure there is a high level of bearishness. Despite the decline in the previous week, there was about $14.5B call option purchases, another record. The amount of call options sold is just mind blowing over the past 5 weeks, including the week of the decline... The tickersense blogger survey is also showing a very unusual level of confidence... - kisa

[Iblayz]

Despite the decline in the previous week, there was about $14.5B call option purchases, another record. The amount of call options sold is just mind blowing over the past 5 weeks, including the week of the decline...

And that could very well be a big reason for the commercials to be tilted so long on the COT. So many are so excited by that. But what if the one thing that has tilted the ledger in that direction is the brokers hedging the selling of call options by purchasing futures contracts. Short calls....long futures as a hegde to preserve the premium. And I suppose that would be a bearish position that appears bullish i.e., the COT report.

[arbman]

And I suppose that would be a bearish position that appears bullish i.e., the COT report.

That's why you need to get your clues from the market itself first, the price, breadth and volume. In any case, you would need an insane amount of cash to move the stocks up at this juncture, I've seen it happen, but it is really worrying because I don't think there is so much liquidity heading this way...