Black Week ended!! Monday - Red or Green

[Khaled187]

Both bulls and bears have valid points. It can drive anyone crazy. I tend to lean more to the bearish side, but the market doesnt care, it will do what it wants, which may be irrational. If you are not afraid of missing out on oppurtunities, its better to just be all cash and see what happens in the next few days.

 

[pumpanddumper]

Quote from scriabinop23:

tell me how the market is inflated?

when:

1) in real terms, against the euro, the s&p is only up 10% over the last 2 yrs, all amidst a great growth boom in china. In real terms, thats 5% growth per year. Against other currencies (commodity ones) ie the AUD, the S&P is actually barely up.

2) PE ratios are in the 15 range, right in line with treasuries + risk premium. Furthering this point, even after all this mess, goldman sachs debt (high quality debt) goes for 5.70% or so [on the long end]; they have an earnings yield over 10%. Just by buying back stock GS is making 4% profit.

3) Remember last month when treasury yields were going to the sky as a result of all that subprime mortgageback hedging (convexity hedging) ? Where are treasury yields now? Pretty much back to where they were before the dumping. What makes you think the credit markets -overpricing- of risk (especially in subprime) won't bounce back and give further support to the market? Its not like we have defaults. We don't. Research it.

The bull case is strong. The reality is that this flushing of bulls and repricing of risk is exactly what we need for the next round of momentum to break 1550 and go to 1600 in S&P. The next buying round is going to resemble a blowoff top. Remember after last February how we blew right thru 1460 ...

Now we're refueling.

You are probably right man and in the near term like next week, it's logical that the DOW will rebound. There is not enough fear and uncertainty to keep going down methodically.

I will be picking my stop Monday and try and make a bit off a bounce. I think the DOW will recover 1/4 of the losses from last week. I may be kicking myself for not buying at 3:59 on Friday and selling into the spike Monday if it happens.

 

[polpolik]

Quote from Khaled187:

Both bulls and bears have valid points. It can drive anyone crazy. I tend to lean more to the bearish side, but the market doesnt care, it will do what it wants, which may be irrational. If you are not afraid of missing out on oppurtunities, its better to just be all cash and see what happens in the next few days.

Well said. I think I'll go all cash and realize some more losses on my options heading into Monday morning then cut sizes when trading.

 

[Khaled187]

Quote from polpolik:

Well said. I think I'll go all cash and realize some more losses on my options heading into Monday morning then cut sizes when trading.

If you dont mind me asking, what would you long/short?

 

[patoo]

Quote from pumpanddumper:
I may be kicking myself for not buying at 3:59 on Friday and selling into the spike Monday if it happens.

I agree, but don't kick too hard. I hate buying on Friday at the close.

Its a L_O_N_G weekend

 

[polpolik]

Quote from Khaled187:

If you dont mind me asking, what would you long/short?

I'll scalp index the Es or YM and nothing more.

 

[piezoe]

Quote from scriabinop23:

tell me how the market is inflated?

when:

1) in real terms, against the euro, the s&p is only up 10% over the last 2 yrs, all amidst a great growth boom in china. In real terms, thats 5% growth per year. Against other currencies (commodity ones) ie the AUD, the S&P is actually barely up.

2) PE ratios are in the 15 range, right in line with treasuries + risk premium. Furthering this point, even after all this mess, goldman sachs debt (high quality debt) goes for 5.70% or so [on the long end]; they have an earnings yield over 10%. Just by buying back stock GS is making 4% profit.

3) Remember last month when treasury yields were going to the sky as a result of all that subprime mortgageback hedging (convexity hedging) ? Where are treasury yields now? Pretty much back to where they were before the dumping. What makes you think the credit markets -overpricing- of risk (especially in subprime) won't bounce back and give further support to the market? Its not like we have defaults. We don't. Research it.

The bull case is strong. The reality is that this flushing of bulls and repricing of risk is exactly what we need for the next round of momentum to break 1550 and go to 1600 in S&P. The next buying round is going to resemble a blowoff top. Remember after last February how we blew right thru 1460 ...

Now we're refueling.

Who says there is nothing worth reading on the ET forums? Nice post. Thanks. I don't necessarily agree with your conclusions, but i like your facts. There are other interpretations.

 

[stocktrader2007]

Guys,
Stocks going to rocket tommorow!!

Its green signal from ASIA and the WORLD..

Go fishing!!

 

[whitster]

"you are not afraid of missing out on oppurtunities, its better to just be all cash "

um, no

not as a trader

it's better to make high expectancy trades - long or short.

that's ALWAYS the case.

 

[loufah]

Quote from stocktrader2007:

Guys,
Stocks going to rocket tommorow!!

Its green signal from ASIA and the WORLD..

Go fishing!!

I saw that, and I just think it means Asia and Europe are now ignoring the US stock markets - we just don't have much of an influence on them, and may continue to move in opposite directions.