Tuesday, September 13, 2011
asinine put buying
it could be option expiration week related and I know I micro analyzing here but the put call ratio is currently at 1.57 which is asinine considering that the market is modestly up today. If we close the day flattish or higher with this type of reading it would make the market very ripe for a massive short squeeze....all it could take is for some flimsy piece of good news like Bernanke saying that he switched from boxers to briefs. New bear market or not, whenever you see the bears pile in like this they get tend to get spanked.
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Yea I noticed that on the extreme put buying on Tuesday as well. Now look at what happens to them when they get too greedy on the downside. Looking at the stream a lot of these bears are all screaming bloody murder today. Complaining about the same crap we've heard the last 2 years. What a bunch of losers.
ReplyDeleteDon't get me wrong the market can pullback given the recent run. But I am bullish long time when sentiment is as negative as it is right now among general population and retail investors.
These retail bears that dominate the message boards and twitter are indeed losers. They blame their failures on manipulation when it's really themselves who they should blame. it seems most of them either take a daytrader or ST trading approach which causes them to get either whipsawed like crazy and when big downside does come they cover far too early because they were burned so many times holding for the kill.
ReplyDeleteIt doesn't matter if its a bull or bear market, whenever you see herd behavior in the form of aggresive put buying when the market is ST oversold you tend to see the market go up until most of these lemmings are shaken out.
But having said all that, it does seem to me that this is a dead cat bounce destined to fail eventually. I realize retail is bearish and ultimately a bullish resolution seems likely but I think given fundamental conditons right now, we may see the market make new lows first....perhaps not disasterous new lows but new lows noththeless. The fundamental backdrop is deteriorating and a Greece default appears unavoidable. We have news that China is willing to support and news that a Eurobond may be forthcoming, meanwhile the economic data released today shows significant deterioration in economic momentum - hope in favor of the bulls, fundamentals in favor of the bears....in the end fundamentals tend to prevail.
So, bottom line....we're likely not out of the woods yet no matter how strong this rally ends up being. If we continue to see no change in this deterioration of the data once the weak/lemming bears are done being squeezed we will see the market drop abruptly.
Yea definitely lots of things going on with the central bankers and government officials meeting. Something big can go wrong for sure. Best to stay light and nimble in the mean time.
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