Why Many So Pessimistic About Market? Is Economic Outlook the Reason?

[shortie]

Quote from shortie:

the anxiety as manifested by VIX spike, is it due to:
1) the debt ceiling uncertainty
2) Italy/Europe problems
3) or US economy prospects?

1) is very short-term and should go away in 2 weeks. i don't even understand why anybody would seriously worry about the debt ceiling formality.

2) Italy was in the news recently, so it could have caused VIX spike. the problems in Europe won't go away for some time and the problems are becoming the old news fast.

3) were there any fresh worries about US economy? bad unemployment numbers?
the earnings season has just started. it is too early for bad news from that front.

I see that VXX is inversely correlated to EWP (Spain ETF) recently. Basically, the excessive VIX we have seen can be explained to a large extent by the European problems. Now that we have some stability in Europe VIX is back down.

How much of US debt ceiling resolution is already priced into VIX? I think a lot. Big players know that the default won't happen. the media has successfully scared the little guy, but the little guy is not able to move the price much anyways.

I am guessing that VIX may go down some once the issue is resolved but by not much.

 

[shortie]

.

 

[shortie]

could Gold be Up because of debt ceiling discussion? what's the connection if any?

as I illustrated above, there is not much fear in VIX that can be attributed to the debt limit uncertainty. could US default fear manifest itself some other way, e.g. Gold?

 

[Dharmakaya]

Quote from shortie:

Am I hallucinating or are there in fact a bunch of pessimists out there right now when it comes to market outlook? I am usually the most pessimistic guy in the room, but nowadays I seem to be one of the more optimistic ones.

If my senses don't deceive me on the above, I have a theory that the economic outlook is weighting heavily on people right now. And that they transfer their perception of the economy on their market expectations.

"Is this the Economy, stupid?"
Please chime in!

According to the last time i checked put/call was 0,5

 

[tradingjournals]

Quote from Dharmakaya:

According to the last time i checked put/call was 0,5

\

Could you pls. post a chart?

 

[tradingjournals]

Quote from shortie:

could Gold be Up because of debt ceiling discussion? what's the connection if any?

I have thought about it today. I think gold is up because foreigners who buy US equity maybe hedging the dollar by buying gold.

 

[shortie]

Quote from Dharmakaya:

According to the last time i checked put/call was 0,5

total put/call 0.84
index put/call 1.1
equity put/call 0.62

The fear did subside since I started the thread (VIX and put/call went down) but there is still some fear present.

for example, street.com poll is bearish today:
Total Votes: 473 votes

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

Bullish 39.53% 187 votes
Bearish 48.2% 228 votes
Neutral 12.26% 58 votes

 

[piezoe]

I have to interject something here that I missed earlier, and it seems most have missed it: If a miracle should happen and the Washington morons actually agree on a significant decrease in spending and at the same time a significant increase in tax revenues-- certainly the right thing to do, but if they do it they are almost certain to do it wrong -- then the market will take a mild hit and go down, because the dollar will strengthen some. But it will be a "hit" in only the nominal sense, and we will all be better off in the long run. (Don't worry though if you are long, the chance of these morons doing the right thing is minuscule.)

 

[noddyboy]

Quote from shortie:

total put/call 0.84
index put/call 1.1
equity put/call 0.62

The fear did subside since I started the thread (VIX and put/call went down) but there is still some fear present.

for example, street.com poll is bearish today:
Total Votes: 473 votes

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

Bullish 39.53% 187 votes
Bearish 48.2% 228 votes
Neutral 12.26% 58 votes

Shortie -- do you really think sentiment indicators work? I think it is at most a 55% chance that they work.

 

[Lucrum]

Quote from noddyboy:

Shortie -- do you really think sentiment indicators work?

Apparently he does. Have you not noticed the couple hundy polls he's posted?