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DAX up 3,9% at the moment,
CAC up 2.3%
people (institutionals) have been caught massively short. They were afraid
of a 25% drop in october, they missed a 25% rise... What is worse? The fear
of things is worse than the thing.
Gwenn
Jpilleafe@xxxxxxx wrote:
> Most of what we react to is either real or perceived as
> being real,...in my mind the "risk" in today's market
> comes from that which as of yet is unknown. For instance,
> in synch with the Full Moon and Winter Solstice, there were
> two earthquakes the past three days,...a moderate one in
> Indonesia,..and a stronger one in Algeria. Had one of these hit
> the US West Coast or Japan,..the markets likely would have taken gas.
> Such an event is not "in the market" so to speak...so you have
> to be alert for a surprise. This media focus on Y2K terrorism is
> another example,...how would the market react to terrorism?
> Bottomline,..when complacency is high as it appears to be now,
> the risk increases that a "surprise" can have a profound effect.
>
> I do feel some sentiment measures are at an "overbelieved" extreme.
> Daily and Weekly CBOE P/C numbers in the .35 area have occured
> at tops in the past.....and almost all the past two weeks,...the equity
> P/C ratio has been at .50 or below,...etc. Inv Intell Survey at 53.2 %
> Bulls and 29.4% Bears is in the alert zone for "overbelief".
>
> Although I use mutual funds as trading vehicles,...my focus tends
> to be very short term,...next day or two,...and my strategy remains
> twofold (as usual) going forward through the holiday season....
> 1. Go long the SP500 if a pulback occurs into a projected energy
> point date,...i.e. pulback to a support level accompanied by an
> increased level of fear, as indicated by high daily P/C ratio,..
> and other short term measures of fear.
> 2. Go long overseas markets using an International fund if and
> when overseas follow through to a move in the US appears likely.
>
> Key timeframes to watch for a short term change in trend include
> today 12-23,....and then 12-30 (which is a 3 week cycle turn,..13
> mkt day count from 11-22, 11-03, and 10-15, etc), and then 01-07
> (after New Moon on 01-06). Otherwise I am very content to be on
> the sidelines,....as there appears no compelling reason to expect
> a major leg up from this point in time.
>
> Happy Holidays. JIM Pilliod jpilleafe@xxxxxxx
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