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By How Much Is The Market Oversold Right Now?
- Thread starter shortie
- Start date
Ben will probably come out 10 min before close to say that he is buying stocks in his personal account.
from Fed's rule book (rule 28c excerpt): "...Fed must take full advantage of the price uncertainty surrounding Quad Witch. To this end, the best effort should be made to time important market moving announcements for such days in such a way as to screw the highest number of Shorts..."
from Fed's rule book (rule 28c excerpt): "...Fed must take full advantage of the price uncertainty surrounding Quad Witch. To this end, the best effort should be made to time important market moving announcements for such days in such a way as to screw the highest number of Shorts..."
This is fucking insane. We're going on day three (in a row; this doesn't exist in reality) of more equity puts than equity calls traded on the CBOE even though prices are not coming off one bit.
Who the is buying these puts and why? It better not be billions in hedgefund dudes who secretly know the crash is coming and are loading the boat! Is the Greece/Debt ceiling/Economy slowdown panic really so bad beneath the surface? Is the "real" sentiment the prices (which are not really oversold) or the options (which are terribly terribly oversold)?
This is confusing the hell out of me and this isn't supposed to happen. Scary stuff. It *should* rally the market but then again the relatively high put/call and general overboughtness should have brought the market down a bit more at any point in 2nd half of 2010 and 1st quarter of 2011.
Edit: And by "this doesn't happen in reality" I meant that there has been one other instance since 2003 where this happened and that was in the middle of the 2008 financial crisis. Surely nobody is going to argue that the situation now looks even remotely similar to that....
Who the is buying these puts and why? It better not be billions in hedgefund dudes who secretly know the crash is coming and are loading the boat! Is the Greece/Debt ceiling/Economy slowdown panic really so bad beneath the surface? Is the "real" sentiment the prices (which are not really oversold) or the options (which are terribly terribly oversold)?
This is confusing the hell out of me and this isn't supposed to happen. Scary stuff. It *should* rally the market but then again the relatively high put/call and general overboughtness should have brought the market down a bit more at any point in 2nd half of 2010 and 1st quarter of 2011.
Edit: And by "this doesn't happen in reality" I meant that there has been one other instance since 2003 where this happened and that was in the middle of the 2008 financial crisis. Surely nobody is going to argue that the situation now looks even remotely similar to that....
Quote from Locutus:
This is fucking insane. We're going on day three (in a row; this doesn't exist in reality) of more equity puts than equity calls traded on the CBOE even though prices are not coming off one bit.
Who the is buying these puts and why? It better not be billions in hedgefund dudes who secretly know the crash is coming and are loading the boat! Is the Greece/Debt ceiling/Economy slowdown panic really so bad beneath the surface? Is the "real" sentiment the prices (which are not really oversold) or the options (which are terribly terribly oversold)?
This is confusing the hell out of me and this isn't supposed to happen. Scary stuff. It *should* rally the market but then again the relatively high put/call and general overboughtness should have brought the market down a bit more at any point in 2nd half of 2010 and 1st quarter of 2011.
Edit: And by "this doesn't happen in reality" I meant that there has been one other instance since 2003 where this happened and that was in the middle of the 2008 financial crisis. Surely nobody is going to argue that the situation now looks even remotely similar to that....
1) Close eyes
2) Buy
Yeah I know what you both said and I agree.
Loaded the boat yesterday on Societé Générale calls and look at those go today. Hedged a bit but would be very surprised if this turns out to be another bull trap like we've had quite a few of recently. Especially because in Europe (dunno about US, probably same) financials have led the way. Industrials and cyclicals lagged heavily (poor economy worries vs Greece worries I guess)
It was clearly the panic gap on the financials in the CAC40 yesterday, so with some luck we've seen the panic low. May need to retest again to shake out yet more people but it's gotta hit a wall somewhere.
Either way if we crash now it would be the first time in history where options sentiment has correctly predicted a decline (I wouldn't be very surprised at another 2-3% more downside though). Options sentiment has correctly "predicted" gains in the past by the way, so 2010 was not a unique situation so I wouldn't say this may be "the inverse of 2010" or something like that.
The "problem" I've seen with the "bull traps" is that they weren't really "bull traps" because there were no "bulls" at any point (only idiots). From my perspective long-term investors are loading the boat here, because all my measurements of what short-term traders (i.e. market timers) are doing show that they did not participate (and rather sold all of) the recent bounces. Someone has to be buying up equities to be causing those bounces.
However you do need trader participation (or at least you need the traders to not fade) in the rallies to get a trend going or you need the traders to be so heavily crowding the short side that they run out of powder, and unfortunately that isn't the case yet by a mile, which has me slightly worried.
Loaded the boat yesterday on Societé Générale calls and look at those go today. Hedged a bit but would be very surprised if this turns out to be another bull trap like we've had quite a few of recently. Especially because in Europe (dunno about US, probably same) financials have led the way. Industrials and cyclicals lagged heavily (poor economy worries vs Greece worries I guess)
It was clearly the panic gap on the financials in the CAC40 yesterday, so with some luck we've seen the panic low. May need to retest again to shake out yet more people but it's gotta hit a wall somewhere.
Either way if we crash now it would be the first time in history where options sentiment has correctly predicted a decline (I wouldn't be very surprised at another 2-3% more downside though). Options sentiment has correctly "predicted" gains in the past by the way, so 2010 was not a unique situation so I wouldn't say this may be "the inverse of 2010" or something like that.
The "problem" I've seen with the "bull traps" is that they weren't really "bull traps" because there were no "bulls" at any point (only idiots). From my perspective long-term investors are loading the boat here, because all my measurements of what short-term traders (i.e. market timers) are doing show that they did not participate (and rather sold all of) the recent bounces. Someone has to be buying up equities to be causing those bounces.
However you do need trader participation (or at least you need the traders to not fade) in the rallies to get a trend going or you need the traders to be so heavily crowding the short side that they run out of powder, and unfortunately that isn't the case yet by a mile, which has me slightly worried.
QQQ at 53.63? Is that the bottom area for today?
Quote from tradingjournals:
QQQ at 53.63? Is that the bottom area for today?
Any good volume readers around here to read the tape of QQQ starting at around 3.17PM/8:17GMT? How accurate is this attempt to understand what happened?
1. At around 8.17GMT: stops below the then low of day were hit. few cents down some well intention volume pick the long side (spike in volume).
2. The less informed shorted way down to 53.63 on less volume.
(8:21GMT/3:21PM a post was added to this thread).
3. 8:37PM: 20 minutes after step 1 time, another bar with volume. Could it be that those who shorted ealier had their stops met (this time on the way up) and/or understand they were possibly sticked?
Please help me learn to read volume action.
Quote from S2007S:
Funny how the market gains over 100% in the worst economical times in history with certain stocks moving up thousands of percent and people question if the market is oversold. Just find it to be hilarious that the SPX is down a whole 7.5% from its highs and the bulls are crying after a 100% rally!!! And the only reason for the rally is because of Bubble ben bernanke, once they stop pumping trillions into the economy maybe we could see a true market place one without manipulation!!!
Always amazes me...