17 replies to this topic

[arbman]

What is the most alarming to me is the aggregate equity call purchases, it again at another record level DESPITE this week's decline. This is very concerning to me. At the same time, the odd lot shorting is also at the levels consistent with the ST lows. However, it did not stop the market from making an IT decline. I am suspecious of another extended wash early this week before starting the next leg higher... Does anyone think that we might be in a very speculative rise in the stock market with the huge excess liquidity that's coming out of the housing and debt markets?

[dcengr]

What is the most alarming to me is the aggregate equity call purchases, it again at another record level DESPITE this week's decline. This is very concerning to me. At the same time, the odd lot shorting is also at the levels consistent with the ST lows. However, it did not stop the market from making an IT decline. I am suspecious of another extended wash early this week before starting the next leg higher...

Does anyone think that we might be in a very speculative rise in the stock market with the huge excess liquidity that's coming out of the housing and debt markets?

Yeah I'm eyeballing the OCC data with a bit of skepticism... the amount of dollars put into calls lately is very out of character to previous data.

Either this data is real or some new system came online that uses equity options as arbitrage for futures or something and this will be the norm in $ and volume for it..

P/C ratio isn't really out of character either.. and nothing in the polls suggest rampant speculative activity by small fry masses.

[arbman]

Even if they are arbing using the equity calls --unlikely to be in billions--, it will take an enormous liquidity to move the market. Is it a lot of institutional shorts that accummulated to this far is now looking for a protection? I think so, the total shares short to the recent volumes (the days to cover) is still very high around 7-9 days for the market... Something is definitely out of whack here, but I think it might be just obvious, that's some short fund managers are now getting very worried with the Fed's desire against any deflation...

[dcengr]

Whats even more peculiar is that the volume is in very small quantities... its showing up as 1-10 option trades. Which has me scratching my head... I'm not seeing a drop in 50+ option trades or in firm or MM trade volumes, so it doesn't appear like someone's shifted to some fancy system that automatically breaks orders into small lots to get fills. And I'm definately not seeing it in put volume either, its all in call volume. We probably have to dig through more of this to see whats really under the hood.

[Pabst]

What is the most alarming to me is the aggregate equity call purchases, it again at another record level DESPITE this week's decline. This is very concerning to me. At the same time, the odd lot shorting is also at the levels consistent with the ST lows. However, it did not stop the market from making an IT decline. I am suspecious of another extended wash early this week before starting the next leg higher...

Does anyone think that we might be in a very speculative rise in the stock market with the huge excess liquidity that's coming out of the housing and debt markets?

Low Treasury rates are a threat to index shorts. As an index short myself I'm trying to make the most counter intuitive fundamental trade in history. Here are the bull items and they're good ones.

1. Rates on on their @ss. Real rates i.e. Treasuries priced in dollars are at negative returns. The 5 year lost a years worth of yield just last week against the Euro. Would you rather be in fixed income or GOOG?

2. The dollar. Anything dollar denominated except a paycheck is gold. Isn't that GOOG and GOLD running neck and neck to $1000?

3. P/E's are moderate and in the context of these low interest rates valuations are a screaming buy. Would you short MCD?

4. Asia shows no signs of slowing down. Japan doesn't count. Emerging Asia and her markets are in clearly defined bull trends and show no overt signs of bubblesque valuations. FXI is a 24. One hears a top is imminent because Chinese housewives are speculating in stocks. Well when I hear of American housewives buying China is when I'll be bearish there. Perhaps China can correct 10% quick so we can break 22% but on balance China will continue higher for years.

5. Inflation doesn't matter. Higher costs but higher revenues. Lower dollar but higher valuations.

6. Sub-prime is 110% in the market and if the financials/builders/consumer stocks enjoy as much as a short covering uptick the indices could pop 10%.

7. The low dollar/low rates inflatometer actually works and saves housing. Housing might be a bit frothy but if you really think about it there's nothing about RE values screaming bubble either. In much of the country 300k gets you a nice home. At sub 6.0% mortgage rates one doesn't exactly need to be a Getty to carry a house.

8. A persistent bear community that gets trapped on the turns. You can rally straight up on minimum downside volatility for 5 years, give them a few false breakouts on mini crashes, cut rates pre market on an options expiration day, pump liquidity on record low dollar/record high stock sessions and you STILL can't get rid of the bear raiders. They're about to get chopped.

Edited by Pabst, 04 November 2007 - 12:19 AM.

[NAV]

Although a couple of my major ideas have been wrong ive traded well as a bear im not gone, as far as a few people who can take a four year cycle and claim their fame and call me a fisherman i say bull s%%$#. My first post as a bear was greeted by so called self proclaimed experts nav who chimmed in i was a fisherman fishing in a dry hole and then hosbe said yeah he probably cant bait his own hook and then airdale said gee I thought id half to through out 25 years work. To bad throw out your work ive got 7 years on you punk. The difference between me and you is i can still get my head through the door. Besides that im real time sensitive and i want to know now not a half hour after you supposedly bought the S&P and let us know after you have a 10 point cushoin.

You sound sooo angry. You must be making a lot of dollah.

BTW, how old are you ?

Nav i say you to cute boy

[thespookyone]

Kisa-Have to agree about the equity call buying, showing no fear. These are the folks who very consistently get washed out before major moves. The bus travels fastest with the least people on, and I doubt "it will be different this time". After a quick shakeout, I believe we will see a very fast speculative move up, but one aspect of that is equity players piling in, not wanting to miss the next huge run-and right now they are allready in-I think they have to be ejected first. As for short funds possibly protecting positions with equity calls, I think if I were in their position, and concerned, I'd use index calls, QQQQ in particular-as they have clearly been the pump target of the last while. And instead, that is where the large mass of small speculators are incredibly bullish. Pabst-Your point #6, that "Sub-prime is 110% in the market" could not be more incorrect, I think. Although big business, the media, and the government profer that idea-bombs drop daily in that arena. The amount of possible loss in that arena has been kept VERY stealth, and I believe remains unknown. You also have a problem as the banks and brokerages put their own value on the instruments-many of which are currently not even sellable. I believe that near the end of next quarter or two, these folks will drop the truth of the losses on the market-and we will see the true IT top. I suppose that right before they drop the bombs, they'll be more than happy to sell the market hard to equity players, who by then will be incredibly frothed up-to regain some of those huge losses-some things never change. NAV-There has never been a shortage of anger toward those that trade VST. Whether angry permabulls, or permabears. They somehow see short term traders as hurting their positions, which I have yet to understand. As a short term trader myself, I always find your posts helpfull and interesting. Being a trader for $, I refuse to infuse any moral judgements on my trades. After they shake out the longs here and rocket the market up, I'll be on board, my beliefs in the economic dangers as a whole aside-I want to be on the bus as a trader, not in front of it. When the market finally tops IT, and the permabears have capitulated-I'll be just as glad to short the market. Probelm with me going long before at least a bit of a test is that the bulls, despite some scarry days-have yet to show fear-when they do, I'm in. One thing VERY clear, the last 6 months or so, TRADERS have made MUCH more money than perma anythings. Good trading to you. Spooky

Edited by thespookyone, 04 November 2007 - 11:02 AM.

[OEXCHAOS]

Feels kinda lonely

Well, not really, but still a very surprizing shift.

One problem you may be witnessing is that the poll didn't get opened early. I've found that the Bearishness on the weekend ameliorates as voting continues after Friday night.

Mark