The Investors Intelligence Survey recently shows the level of bullishness to be off the charts as well. The tech sector euphoria feels like the dot-com bubble days. Low put/call numbers indicate that the bulls are complacent, no fears or worries at all, the 0.7 numbers show that bulls expect the markets to continue skyward indefinitely. Everyone is wearing rose-colored glasses. Therefore, this chart is contrarian, and the low numbers now place all traders on notice to assess long positions and decide if you want to hold them, or not, moving forward, since a market sell off is at hand. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.
Given the surprising run up we've had the past couple months and the Giants winning the Superbowl, would you change your 2012 prediction of where the spx ends up? Take care.
ReplyDeleteSteve
Hello Steve, in reference to the Superbowl Indicator, since the Giants won, the markets should end the year higher. But last time the Giants won in 2008 resulted in an epic market crash. Nope, seasonality factors are important, and fun to watch, but they only serve as a means of determining the back ground currents of the markets.
ReplyDeleteThink of seasonality as the current around a boat you are sitting in and without rowing, the current gently pushes the boat in one direction or the other, that would be seasonality. But no, you would never trade off the Superbowl Indicator no matter what it tells you.
As far as the market run-up goes, nope, that does not change any projections. The idea behind yearly predictions is to simply let them ride all year and see what happens, we still have 11 months to go. The goose in the markets early this year was due to traders front running the anticipated China triple R easing--which stillhas not been announced--but it is obviously pricedinto the markets, plus some.
Also, tech is strongest in Q4 and this strength continued into January, then once AAPL earnings blew-out, tech took on a euphoric move reminiscent of the dot-com bubble. Thus, tech drove the indexes higher. What goes up must go down.
Weakness is expected in the markets this year and the only countertrend to down markets depends on how much and when quantitative easing stimulus occurs from the ECB, the Fed and the BOE will be announcing qe as well.
Thus, no changes, lots of trading remains in the year. Watch the behavior of the euro, and dollar, they will tell you the story each day. Euro down=dollar up=commodities down=equites markets down, and visa vesa.
Also monitor the Nasdaq Index, NDX or COMPQ, in relation to the SPX, on a percentage basis each day. Tech has led the markets up this year. If you see the Nasdaq Indexes now leading the SPX to the downside that will signal continued selling ahead.