Greetings-
Been busy and gone a bit, but had to write…
This could prove to be a very dangerous time. The market ran up 17% since late AUG.
The Individual investor swung from very bearish in late AUG to wildly bullish in early 11-NOV.
Volatility in stock options is pricing in that nothing bad will happen…
Bullish minus Bearish Sentiment…very bullish of late.
VIX index…nobody is buying insurance because everything is fine?
Market stalled at exactly the the wrong levels… if it is healthy.
The SP500 failed where it topped last April around 1220 and looked like it ran out the shorts and then failed in the first week of NOV just above 1225.
SP500 topped in late 2007 at 1565 just above its 2000 highs at 1550ish. Rough math shows a close of 1265 in 2007 down to a close of 676 last APRIL up to 1223 was nearly a perfect 61.8% retracement…this could mark the end of a bear market rally.
Lastly, the market is now 82% higher than in APR of 2009.
Does that reflect your sense of reality?
Is business/economy 82% better?
Can interest rates get any lower?
Can the FED or TSY do any more?
Can risk premiums get any lower?
Can investors get much more bullish?
Every conceivable stimulus has been poured on the economy and the market. It may quickly become all about paying off debt and shrinking budgets and spending.
Very careful here. The economy, the government and the public may all have run out of gas. The market may smell this fast.
Leon
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