Is DOW 11,000 A Bull Trap?"

[staffpro]

Quote from HuggieBear:

tops only show up in hindsight unfortunately, but its a fair point nonetheless...

isee put/call index has closed over 240, for 4-5 days in a row now, even at 276 which is 3 points under the all time high in october 2007, today it closed at 262.

Back in the day any close over 240 would lead to a substantial pull back.... its been almost a week now of closing over 240... im speechless.

I don't know what it will take to bring this market down but one thing this rally has taught me is definitly to not have a bias, as thats exactly what (i'll admit it) killed me.

 

[Petsamo]

Quote from noddyboy:

Long EWZ long more GLD? -- That is my mantra. Or are you saying the reverse?

I'm a little long on EWZ. I may sell 'em Monday. GLD, I don't bother with. It's not volatile enough.

 

[Cherrypicker]

When the market turns south, then and only then is it time to start shorting. Until then, stay out of its way or it'll steam roll ya!

 

[shortie]

The first earnings are coming out next week. In Jan almost the exact top was on Mon right before AA released its earnings. The pumped up market went downhill after that week. Supposedly, Greece was the main culprit at that time. But, i now think Greece news simply masked the real culprit - the crappy earnings. I have no idea what kind of earnings will come out this time, but one has to wonder if all the positive surprises are again priced in after the huge run-up we have had, just like they were in Jan.

 

[shortie]

Traders are bearish while investors (based on thestreet.com poll) are bullish. This has been true for several weeks now. It is interesting how one group of market participants keeps getting it wrong week after week after week. I am wondering what happens first: the market drops, or the traders become bullish (and then the market drops )

Bullish 7 25.00%
Flat 4 14.29%
Bearish 11 39.29%
I prefer to keep my opinion to myself 6 21.43%


thestreet.com poll:

1 What would best describe your stance heading into the coming week of trading?

Bullish 59.05% 238 votes
Bearish 26.55% 107 votes
Neutral 14.39% 58 votes

http://www.thestreet.com/stock-market-news/10603675/poll-bull-or-bear.html?kval=dontmiss

 

[shortie]

the current price of oil (adjusted for USD) is right where it was before the market started its decent in 2007.

notice that most recently the market sold off in Oct 2009 and Jan 2010 when the oil approached the current level. so this level is still critical 3 years later. the reason for this be because in 2007 the breakout out of this level meant an irreversible rise in oil and the accompanying market slide.

now compare the multi-year bull run after 2003: the oil was NEVER at this high level just allowing the economy to rebound and the market to grow unhampered.

is the economy now on stronger footing than it was in 2007? i sincerely doubt it. therefore, the only way this market has a chance of a sustainable upside is if the oil goes down but it won't.

 

[shortie]

This is the ad i got from IB:
"IB Lends at Just 1.25%
While the Fed is lending money at almost zero interest rates, why not take advantage of it through IB? Interactive Brokers will lend up to $566,000 at 1.25% for every $100,000 in a Portfolio Margin4 Securities Trading account. As of 4/5/2010, more than 500 stocks had a dividend yield of 5% or more. "

So, one puts int 100K and get to play with 566K "to buy stocks yielding 5%" 5-1.25=3.75% or more of the "free return" per year. with 5.66 leverage one gets 5.66*3.75%= ~21% - that's a very nice ROI!!

naturally, IB has all kinds of disclaimers about the risks associated with margin, etc. so the people are properly informed. I have no quarrel with IB here. It is not about IB at all. To me, the ad captures the spirit of what's been going on for the last year with all the cheap money floating around: borrow cheap money, load up on stocks, sit out small corrections and reap huge ROI either from stock price appreciation or from dividends.

the behavior has been reinforced by the more than a year of the biggest bull run ever. some day it has to stop or it will get punished. since the interest rates are not going up any time soon, the risky behavior won't stop voluntarily. the punishment will come with a correction sharp enough to hurt many overleveraged bulls.

 

[Yellow123]

my opinion it is

 

[shortie]

Quote from shortie:

The title is courtesy of Petsamo.



My top secret models suggest that two levels may be reached next week: SPY 117 (-2%) and 114 (-4.5%). The last one i have hard time believing in myself, but that's what a model says.

max pain is at 117. i don't look at max pain often, but every time i looked the price never got to it. as i posted before we had extremely low put/call ratio in the last couple of weeks. i am guessing these voracious call buyers will get screwed this week so max pain makes sense.

any other SPY levels are reasonable to expect in the coming week(s)?

http://www.optionpain.com/OptionPain/Option-Pain.php

 

[Lojanica]

4/19